Chapter – 8

Role of SSI in the Indian Economy

The Small-Scale Industries contribute in a notable way in the Indian Economy.

Numerically over 95 % of industrial units are SSI. They contribute about 40 % of the

manufacturing sector output, 35 % of exports and provide direct employment to nearly 200

lakhs persons. Number of units as per data available for the year 2002-03 stands to about

36 lakhs. Production and export estimates are 7,60,844 crores and 81,930 crores

respectively. SSI sector is estimated to have recorded a growth of 7.5 % in output, at 1993-

94 prices, as compared to growth of 6.0% in the industrial sector as a whole and 6.1 % in

manufacturing sector. The outstanding bank credit to SSIs by banks was Rs. 62, 917 crores

as an end March 2002 which formed 12.6% of the net bank credit.

The small-scale industries sector comprises modern and traditional industries. The modern

segment consists of industries under SIDO and powerlooms, while the KVIC, handlooms,

handicrafts, coir, sericulture and silk boards manage the traditional industries. Further

classification divides the industries into organized and unorganized sectors based on the

criteria of employment in combination with the use/non-use of electric power.

Credit dispensation to the small-scale industries sector is controlled by SIDBI, Commercial

banks; Regional Rural Banks, Co-operative Banks, State Financial Corporations, State

Industrial Development Corporations and State Small Industries Development

Corporations. Other agencies include NABARD, KVIC, NSIC and NEDFI.

The high importance being given to SSI by the planners is for the following reasons:

Capital investment for establishing an SSI unit is low.

More jobs are generated in SSIs in relation to the capital investment.

SSIs can be dispersed in rural and backward areas with ease.

SSIs help in contraction of regional imbalances.

SSIs promote the culture of entrepreneurship at grass root level

SSIs make effective use of local material resources and human skills

SSIs exhibit quick adaptability of technology and operational flexibility

SSIs provide a cost-effective base for outsourcing to a large unit

The estimated classification of SSI units is as under:

Location 40% Rural Areas

50% Urban Areas

10% Metropolitan Areas

Ownership 80% Proprietary Units

17% Partnership Firms

3% Limited Companies

Activity 45% Manufacturing

15% Processing

20% Job Work

20% Repairing / Servicing

Investment 90% Below Rs. 5 lakhs

7% Between Rs. 5 lakhs to Rs. 25 lakhs

3% Above Rs. 5 lakhs

No. of Workmen 95% Below 10

5 % Above 10

Entrepreneurship and SSI are inter-linked. It is in the national interest to teach the subject

“Management of SSI” to the young generation.

The Present Scenario in SSI Sector

The present state of Small Scale Industries (SSIs) in terms of parameters like the

estimated number of units (both registered and unregistered), employment,

production and export is as under:

Year No. of SSI

Units (lakh)

Employment

(Lakh Persons)

Production

(Rs. Crore)

Exports

(Rs. Crore)

2005 123.42 249.91 4, 70, 966 1, 24, 416.56

Evolution of the Definition of SSI in India

To evolve a framework for the development and support of the village, tiny and modern

small-scale segment of the small industry sector, various policy decisions have been taken

by the Government of India. These have addressed the basic requirements of units in the

sector by providing assistance through various measures such as credit dispensation,

technology upgradation, technical training, industrial infrastructure support and

entrepreneurship development. With a view to ascertaining the types of industrial units

which required special support, it was considered necessary to develop an appropriate

classificatory definition for SSI units, spelt out under the industries (Development and

Regulation) Act, 1951.

The official definition of SSI was first evolved in 1950 in terms of the size of gross

investment in fixed assets (plant & machinery, land, building, etc.) as well as in terms of

the strength of the workforce in the unit concerned. This criterion underwent several

changes over a period of time. In the late fifties, a shift from a workforce – based definition

to an investment – based definition was effected. In 1966, the original amount invested in

plant and machinery was adopted as the sole norm for defining a unit as small-scale or

otherwise. Other concepts, namely, ancillary and tiny units were introduced in 1960 and

1977, respectively. Industry – related business oriented service enterprises were classified

for the first time as Small – Scale Service Enterprises Establishments (SSSEs) in 1985 and

latter in 1991 redefined as Small – Scale Service and Business (industry related)

Enterprises (SSSBES).The Government in 1988 defined the term. ‘Women Entrepreneurs’

Enterprise’ indicating 51% equity held by women; the same was modified in 1991.

Periodic revisions in the definition of SSIs as made by the Government of India are

furnishes in the Annexure.1.

The SSI sector in India covers a wide spectrum of industries categorized under small,

ancillary, tiny SSSBEs, women enterprise and cottage segments, ranging from small

artisans / handicraft units on one end to modern production units with significant

investments on the other. This sector has acquired a pre – eminent place in the socio –

economic development of the country, as it acts as a ‘nursery’ for the development of

entrepreneurial talent. The sector produces a wide range of about 7500 products.

The term ‘Small – Scale Industry’ evokes different meanings for different agencies that

defines SSIs. The Planning Commission, Government of India, for instance considers the

entire Village and Small Industries Sector (VSI) as the SSI sector. The National Sample

Survey Organization under the Central Satisfaction Organization, Government of India, on

its part, defines the entire industrial sector in terms of Organized and Unrecognized

segments, as well as in terms of industrial enterprises run by households and non –

households. The Central Excise Department, on the other hand identifies SSIs on the basis

of the annual turnover of individual units. The Reserve Bank of India (RBI) adopts an

expanded definition of SSI which includes traditional industries as well. The Government

of India has recently redefined as SSI unit by lowering down the upper investment limit

from Rs. 30 million to Rs. 10 million in plant and machinery. As per this definition, the SSI

sector includes under its coverage residual units i.e. all such units that do not fall under the

assistance programmes of any of the Statutory Boards responsible for the development and

promotion of tiny and cottage segments of the SSI sector. The different segments of SSI

have been widely defined as under:

Small Scale Industrial Undertakings

Following the Abid Hussain Committee recommendations, the Government of India, vide

Gazette Notification No. S.O.857 (E) dated December 11, 1997 had raised the ceiling on

investment in plant and machinery for SSI and ancillary undertaking to Rs. 30 million. This

definition of SSI and ancillary has since been revised. As per the Government of India

Notification No. S.O. 1228 (E) dated December 24, 1999, an industrial undertaking in

which the investment in plant and machinery, whether held on ownership terms or on

lease / hire purchase basis does not exceed Rs. 10 million is regarded as a small – scale

industrial undertaking.

Ancillary Industrial Undertaking:

An industrial undertaking which is engaged in the manufacture or production of parts,

components, sub – assemblies, tooling or intermediates, or the rendering of services is

termed as an ancillary undertaking. The ancillary undertaking is required to supply or

render or propose to supply not less than 50% of its production or services, as the case may

be, to one or more other industrial undertakings. The investment on plant and machinery,

whether held on ownership basis or on lease or on hire – purchase, should not exceed Rs.

10 million as in the case of ancillary industrial undertakings.

Tiny Enterprise:

A unit of treated as a tiny enterprise where the investment in plant and machinery does

exceeds Rs. 2.5 million, irrespective of the location of the unit.

Women Entrepreneurs Enterprise:

A women Entrepreneurs Enterprise is termed as an SSI unit/industry related service or

business enterprise, managed by one or more women entrepreneurs in proprietary concerns,

or in which she/they individually or jointly have share capital of not less than 51% as

partners/shareholders/directors of private limited company/members of a co-operative

society.

Small – Scale service and Business (Industry Related) Enterprise (SSSBE):

An industry related service/Business enterprise with investment upto Rs. 0.5 million in

fixed assets, excluding land and building, is treated as an SSSBE.

Recent changes in the Definition (2.10.2006)

Government of India has enacted “Micro, Small and Medium Enterprises

Development Act, 2006” (MSMED) which has come into effect from 2.10.2006.

(A) Definition of Enterprises engaged in the manufacture or production of Goods

(i) a micro enterprise, where the investment in plant and machinery does not

exceed twenty-five lakh rupees;

(ii) a small enterprise, where the investment in plant and machinery is more

than twenty-five lakh rupees but does not exceed five crore rupees; or

(iii) a medium enterprise, where the investment in plant and machinery

is more than five crore rupees but does not exceed ten crore rupees;

(B) Definition of Enterprises engaged in providing or rendering of Services

(i) a micro enterprise, where the investment in equipment does not exceed ten

lakh rupees;

(ii) a small enterprise, where the investment in equipment is more than ten lakh

rupees but does not exceed two crore rupees; or

(iii) a medium enterprise, where the investment in equipment is more

than two crore rupees but not exceed five crore rupees,

Cost of pollution control, research and development, industrial safety devices and

such other items as may be specified, by notification, shall be excluded.

Steps for Setting up a Small Industrial Enterprise

The potential entrepreneur would become an entrepreneur only when he owns an

enterprise. The business enterprise to be set up can be a manufacturing venture, a trading

firm or a service establishment. The manufacturing venture encompasses the steps

necessary for setting up a trading firm or a service establishment, as well. The steps in

setting up a small industrial enterprise are as follows:

Deciding to go into business: This is the most crucial decision a person has to

take which may mean shunning wage employment and opting for self-

employment. He needs to understand the benefits and risk of entrepreneurship.

Analyzing Strengths/Weaknesses: Having decided to become an entrepreneur

the person has to analyze his/her strengths/weaknesses. This enables to know what

type and size of business would be most suitable. The strengths and weaknesses

may vary from person to person.

Availability of Own Money: No business can be created, with zero capital. The

‘Own Money’ concept means the funds available with an entrepreneur from his

own source or family or friends. The size of the units depends on the availability

of ‘Own Money’ in short – term and long – term.

Training: The above analysis may reveal glaring deficiencies which are required

to be made up through training. Such training could be for:

a. Developing Skill for entrepreneurship.

b. Developing technical, conceptual and managerial skills.

Environmental Scanning: It is essential to study and understand the business

environment in which they operate particularly the Industrial Policy, Economic

Policy, Legal Environment, Technological and above all the Markets.

Product Selection: The next step is to decide what business one should venture

into, the product or range of products that shall be taken up for manufacture and in

what quantity. The level of activity will help in deciding size of business and form

of ownership. Several number of project ideas through environmental scanning

can be short listed. Closely examine each one of these and zero – in on to a final

product.

Market Survey: These days it is easy to manufacture an item but difficult to sell.

So it is prudent to survey the market before embarking upon production and ensure

that the product chosen is in sufficient demand and is preferably in the growth

phase of a product life cycle.

Forms of Ownership: A firm can be constituted as proprietorship, partnership,

limited company (public or private) or co-operative society. This depend on the

type, purpose and size of business. Decision of ownership can also be made on the

basis of resources in hand or from the point of view of tax planning.

Location: The next step is to decide on the place where the unit is to be located.

The place can be hired or owned. The size of plot, covered and open area and

suitability of site has to be decided. Logistics considerations are more important

than emotional considerations.

Technology: To manufacture any one item various processes are available.

Information on all these available technologies should be collected and the best

one should be identified. This will be useful in determining the machinery and

equipment to be installed.

Machinery and Equipment: Having chosen the technology the machinery and

equipment required for manufacturing has to be decided, suppliers identified and

their costs estimated. Planning well in advance for machinery and equipments,

especially if it has to be procured from outside the town, state or country will

control the project implementation schedule.

Business Plan: After deciding on the form of ownership, location, technology for

manufacturing, machinery and equipment, preparation of feasibility report can be

undertaken. The economic and technical feasibility of the product selected has to

be established through a project report. A project report that may be prepared is

helpful in formulating the financial, production, marketing and management plans,

obtaining finance, shed, power, registration, raw material quoteas etc. The

business plan should indicate the vision of the promoter and short term and long

term aspects of the project implementation.

Finance: To obtain money certain steps specified procedures have to be followed

to obtain it. A number of financial agencies will give loans on concessional terms.

Under some schemes entrepreneurs are also eligible for subsidies, which obviate

the need for margin money.

Technical Know-how : The technical know-how is required to be arranged

through TCO, NSIC, SSIDC, Private Consultants, SISI, foreign collaborators or

even machinery suppliers. Facilities are available to SSI for making variety of

technical know-how arrangements including turn-key jobs.

Power Connection: The power requirement should be assessed phase wise. There

are ceiling on the availability of LT power supply based on the location. HT power

supply may mean additional investment in transformer and substation. Most states

need a No Objection Certificate from the concerned Pollution Control Authorities

before the power connection.

Installation of Machinery: After arrangement of finance, work, shed, power, etc.,

it is essential to procure machinery and begin its installation as per the plant

layout.

Insurance: It is necessary to have adequate insurance for the fixed asset at this

stage and later on for the current assets as well.

Recruitment of Manpower: After installation of machines manpower is required

to run them. So the quantum and type (skilled, semi-skilled, unskilled,

administrative etc.) of labour also are important. This follows the recruitment,

training and placement.

Raw Material: The raw materials required may be available indigenously or, may

have to be imported. Government agencies can assist if raw material required are

scarce or imported.

Production: The unit established should have an organizational setup. The

structure of the manpower proposed to be employed must be determined.

Production of the proposed items should be taken in two stages: (a) Trial

Production (b) Commercial Production. Trial production will help tackling of

problems confronted in production and test marketing of the product. This reduces

chances of losses in the eventuality of mistakes in project conception. Only after

successfully launching the product at test marketing stage commercial production

should be commenced.

Marketing: Marketing is the key to success in a competitive situation. Test

marketing will save the enterprise from going to disrepute just in case product

launched is not well accepted in the market. It will also assist in carrying out

modifications in the design, characteristics and features of the product. Having

successfully test marketed the product, commercial marketing can be undertaken.

Marketing covers reaching the customer, distribution channels, commission

structure, pricing, advertising or publicity etc.

Quality Assurance: Quality Certification like ISO 9000, BIS (earlier ISI), “Q”

Mark, Agmark, “Del-in”, etc. depending upon the products should be obtained. If

there is no quality standards specified for the product, the entrepreneur should

evolve his/her own quality control parameters. Quality, after all, ensures long -

term success.

Marketing Research: Once the product or service is introduced in the market,

there is need for continuous market research to assess needs and areas for

modification, upgradation and growth. Market becomes the waterloo for most SSI

entrepreneurs as they ignore this vital function. Initial success should not give a

sense of complacency.

Monitoring: Periodical monitoring and evaluation not only of markets but also

production, quality and profitability helps in knowing where the firm stands in

comparison to performance envisaged in the business plan. It also identifies

direction of future growth.

(Registration aspects is dealt separately)

Registration Formalities for SSI

Small Scale and ancillary units should seek registration with the Director of Industries of

the concerned State Government.

Registering Your SSI Unit: The main purpose of Registration is to maintain statistics and

maintain a roll of such units for the purposes of providing incentives and support services.

States have generally adopted the uniform registration procedures as per the guidelines.

However, there may be some modifications done by States. It must be notified that a small

industry is basically a state subject. States use the same registration scheme for

implementing their own policies. It is possible that some states may have a ‘SIDO

registration scheme’ and a ‘State registration scheme’.

Benefits of Registration: The registration scheme has no statutory basis. Units would

normally get registered to avail some benefits, incentives or support given either by the

Central or State Govt. The regime of incentives offered by the Centre generally contains

the following:

Credit Prescription (Priority Sector Lending), differential rates of interest etc.

Excise Exemption Scheme.

Exemption under Direct Tax Laws.

Statutory support such as Reservation and the Interest on Delayed Payments Act.

(It is to be noted that the Banking Laws, Excise Law and the Direct Taxes Law

have incorporated the word SSI in their exemption notifications. Though in many

cases they may define it differently. However, generally the registration certificate

issued by the registering authority is seen as proof of being SSI).

Objectives of the Registration Scheme: They are summarized as follows:

To enumerate and maintain a roll of small industries to which the package of

incentives and support are targeted.

To provide a certificate enabling the units to avail statutory benefits mainly in terms

of protection.

To serve the purpose of collection of statistics.

To create nodal centers at the Centre, State and District levels to promote SSI.

Features of The Scheme:

DIC is the primary registering centre.

Registration is voluntary and not compulsory.

Two types of registration is done in all States. First a Provisional Registration

Certificate (PRC) is given. After commencement of production, a Permanent

Registration Certificate is given.

Provisional Registration is normally valid for 5 years and Permanent Registration is

given in perpetuity.

Provisional Registration Certificate (PRC):

This is given for the pre-operative period and enables the units to:

Obtain the term loans and working capital from financial institutions/ banks under

priority sector lending.

Obtain facilities like land, power, other approvals etc.

Obtain various necessary NOCs and clearances from regulatory bodies such as

Pollution Control Board, Labour Regulations etc.

Permanent Registration Certificate:

Enables the unit to get the following incentives/concessions:

Excise exemptions.

Income – Tax exemption and Sales Tax exemption as per State Govt. Policy.

Incentives and concessions in power tariff etc.

Price and Purchase Preference for goods produced.

Availability of raw material depending on existing policy.

Procedure For Registration:

Features of the present procedures are as follows:

A unit can apply for PRC for any item that does not require industrial license which

means items listed I Schedule – III and items not listed in schedule – I or schedule –

ii of the licensing Exemption Notification. Units employing less than 50 / 100

workers with / without power can apply for registration even for those item

included in schedule – II.

Unit applies for PRC in prescribed application form. No. field enquiry is done and

PRC is issued.

PRC is valid for five years. If the entrepreneur is unable to set up the unit in this

period, he can apply afresh at the end of five years period.

Once the unit commences production, it has to apply for permanent registration in

the prescribed form.

The following form basis of evaluation:

The unit has obtained all necessary clearances whether statutory or administrative,

e.g. Drug License under Drug Control Order, NOC from Pollution Control Board,

if required etc.

Unit does not violate any locational restrictions in force, at the time of evaluation.

Value of plant and machinery is within prescribed limits.

Unit is not owned, controlled or subsidiary of any other industrial undertaking as

per notification.

De – Registration: A small Scale Unit can violate the regulations in the following ways

which will make it liable for deregistration:

It crosses the investment limits.

It starts manufacturing any new item or items that require an industrial license or

other kind of statutory license.

It does not satisfy the condition of being owned, controlled or being a subsidiary of

any other industrial undertaking.

The authority in Maharashtra is the Development Commissioner (Industries), Directorate of

Industries, Government of Maharashtra, New Administrative Building, Madam Cama

Road, Mumbai 400 032 or the District Industries Centres.

Recent Changes in the Registration Procedure (2.10.2006)

Filing of Memoranda by MSMEs

Process of two – stage registration of Micro & Small Enterprises dispensed

with & replaced by filing of memoranda.

Filing of memorandum optional for all Micro & Small Enterprises.

Filing of memorandum optional for Service Sector Medium Enterprises.

Filing of memorandum mandatory for Manufacturing Sector Medium

Enterprises.

Existing Registered Units shall file the Memorandum within 180 days.

Concessions and Incentives for SSI in India

The main responsibility for the development of small-scale industries rests with State

Governments. Nationalization of Banks, protective and promotional policies by the

Government, awareness created through media and better educational facilities resulted

into significant growth from 1969 onwards. In pre-liberalization era, SSI enjoyed following

key advantages:

Reservation of items for exclusive manufacture in SSI sector

Concessional Finance from Banks

Subsidiaries from Central and State Governments

Excise Concessions

Protected Market

With opening-up of the economy, the situation has taken a different turn. There are still a

wide range of facilities, concessions and incentives. But the focus has changed. An outline

is narrated below:

1. Investment Limit in Plant and Machinery: The Government of India have lowered

the ceiling on investment in plant and machinery for small-scale and ancillary

industrial undertaking from Rs. 300 lakhs to Rs. 100 lakhs with effect from December

24, 1999. The revision has been effected with a view to securing that the ownership

and control of the material resources of the Community are so distributed as to sub

serve the common good, easing the problem of unemployment, and promoting in a

harmonious manner the industrial economy of the country. The investment ceiling for

tiny unit has been retained at Rs.25 lakhs.

2. Reservation of items for exclusive manufacture in the small-scale sector: The

policy was initiated in 1967 with 47 items having been initially reserved to promote

and protect he small-scale sector. Significant increases in the number of items were

made from time to time and particularly in 1977. At the peak level 836 items appeared

in the list. The Expert Committee on Small Enterprises set up under the Chairmanship

of Shri Abid Hussain had considered various aspects pertaining to reservation of items

including quality of SSI products which affected export earnings, import policy

liberalization and related issues. In January 1997, the Abid Hussain Committee

submitted its report to the Government and concluded that reservation policy is

redundant and therefore recommended a total dereservation. The inclusion of over 600

products under OGL fro the purpose of imports per se has partially defeated the

purpose of reservation as these products can now compete with the one produced by

domestic manufacturers. Policy changes in 1997 permitted large-scale units to

manufacture reserved products but with a 50% export obligation. Under the free trade

agreements amongst SAARC countries, produce items reserved for Indian SSI sector

and export them into India. There is a progressive dereservation approach. In the 2004-

05 Budget about 85 items were dereserved.

3. Reservation of items for exclusive purchase from SSI: Purchases under the

Government Stores Purchase Programme by the Director General of Supplies and

Disposal (DGS&D) are made exclusively from SSI units for specified items known a

reserved list. Prior to 1997 there were 409 items in this list, which has now been

substantially reduced. Secondly, for these items and even for those items which are not

reserved, a purchase price preference of 15%,as against the quotations from large-scale

units or other suppliers is given to the SSI designated as the nodal agency to promote

the marketing of SSI products to the Government under this preferential Purchase

Policy. NSIC enlists SSI under a Single Point Registration Programme (SPRP) to

avoid multiplicity in the registration with various government agencies.

4. Foreign Direct Investment: To provide access to the Capital market and to encourage

modernization and technological upgradation in SSI sector, equity participation upto

24% of the total shareholding is allowed in the SSI units by other industrial

undertakings including foreign collaborators. Further, those SSI units seeking foreign

equity beyond 24% is considered policy initiative has opened up opportunities for SSI

to expand their investment bases to improve performance.

5. Export Promotion Councils: In order to overcome problems in the marketing of SSI

products in the overseas markets, it is considered desirable to adopt a consortium

approach. The Export Promotion Councils (EPCs) for different industries make efforts

to promote exports of the products of their member units through direct marketing,

developing vendor relations, opening respective sales outlets abroad as a collective

export marketing strategy. The activities of different councils are targeted to increase

the exports from the sector.

The Export Promotion Councils are registered as non-profit organizations under the

Companies act/Societies Registration Act. EPCs perform both advisory and executive

functions. These Councils are also the registering authorities under the Export and

Import Policy 1997-02 and have been assigned various roles and functions for the

promotion of exports.

SSI units can access export-related services from the Councils. Some of them obtain

bulk purchase orders from buyers and distribute these among SSI units for supply to the

council for deemed export. This process ensures orders to every member unit and the

timely delivery of goods. For such a service, the councils levies a nominal fee from

member units. EPCs also offer a package of other incentives to existing as well as new

exporters and by dissemination of information, to keep the members of the changes

with regard to export-import policies and procedures, customs and excise duty rules etc.

Besides trade enquiries, tender notices etc. are circulated among members in order to

help them you avail of business opportunities and augmenting overall exports.

Membership charges of such councils are minimum for SSI.

6. Incentive Scheme for acquiring ISO 9000 certification: ISO 9000 has become

synonymous with quality. It is the world accepted quality norm without which it many

not be possible to export the goods to the other countries. Small-scale industries are

making substantial contribution in countries exports. In Order to prepare the Small

Scale Industries to face the threat coming in the way of export in future due to ISO

9000 barrier, Office of the DC (SSI) has promoted the schemes to give incentive to

small scale industries acquiring ISO 9000 certification to the extent of the cost subject

to the maximum of Rs.75,000 in each case. The scheme is implemented by SIDBI.

7. Integrated Technology Upgradation and Management Programme (UPTECH): A

new scheme on Upgradation of Technology (UPTECH) has been conceptualized and

approved during the year 1997-98. it covers all the facets of technological

improvements such as quality upgradation, energy conservation, pollution control,

process modifications, modernization etc. Some illustrative clusters, where the Scheme

operates are: -

I. The Lock Industry at Aligarh, UP.

II. The Pottery Cluster at Khurja, UP.

III. The Forging Industry at Ludhiana & Jalandhar in Punjab, Hyderabad and

Vijayawada in Andhara Pradesh.

IV. The Food Processing Industry Clusters at Pune and Chitoor in Andhara Pradesh.

V. The Neem and Perfumery Industry at Kannauj, UP.

VI. The Brassware Cluster at Moradabad, UP.

VII. The Sports Goods Cluster at Jalandhar, Punjab

VIII. The Bulk Drug and Formulation Industry at Kushaiguda

IX. Auto Components Industry, Pune, Indore and Chennai.

X. Tile Industry along the West Coast

XI. Rice Milling Cluster at Bhandara in Maharashtra

XII. Toy Industry in Delhi and Noida.

8. Technology Bureau for Small Enterprises: The Technology Bureau for Small

Enterprises (TBSE) is a joint venture of Small Industries Development Bank of India

(SIDBI) and the Asian Pacific Center for Transfer of Technology (APCTT).

TBSE offers under one roof, assistance to existing and prospective small enterprises in

the sphere of technology accession transfer and funds syndication. The main objective

of the Bureau is speedy access and transfer of technologies. The bureau has a large

computerized database on technology options available in the Asia Pacific region. It

identifies business partners willing to collaborate, brings them face-to-face extends

support to tie-up financial assistance.

The bureau undertakes financial syndication covering term loans, foreign currency,

venture capital, lines of credit, equity assistance and bills finance. It offers package for

the export of technologies as well as SSI projects and products and arranges assistance

through SIDBI and other Development related Financial Institutes apart from

commercial banks.

TBSE provides consultancy services to encourage product excellence; arranges buyer-

seller meets on a regular basis for specific product groups; undertakes technology

appraisal and documents latest developments in the areas of technology, processes,

export patterns, market opportunities etc.

9. Small Enterprises Information and Resource Center Network (SENET): The

Scheme came into being w.e.f. April, 1997 with a view to pioneer, create and promote

data-base and information services and facilitate information sharing (the small

entrepreneurs, exporters and market avenue seekers and other interested ones),

information providers and between relevant institutions in mutually beneficial and cost

effective manner. It also aims to pro vide technical know-how and package assistance

to small information server. As on date SENET has electronic nodes comprising of

Main Nodal Centre (MNC) located at Headquarters i.e. DC (SSI), Technology Nodal

Centers (TNCs) in Metros and User Centers (UCs).

10. Relaxation under Environmental Laws: The Ministry of Environment Forests have

simplified the consent procedure in respect of small-scale industrial units for obtaining

consent under the Air (Prevention and Control of Pollution) Act, 1981 and Water

(Prevention and Control of Pollution)Act, 1974. To this effect, the Ministry have

issued directions to the Central Pollution Control Board on 12 th September 1992 and

10th May 1993 under clause (a) od Sub-Section 1 of Section 18 of the Water

(Prevention and Control of Pollution) Act, 1974, stating that for the units of small-

scale sector except 17 categories which are heavily polluting, the acknowledgement of

the application by the Board would serve the purpose of the consent and the consent

granted shall be valid till 15 years or till such time the industry modifies or changes its

process or any treatment and disposal system or brings into use any new or altered

outlet for discharge of effluent/sewage whichever is earlier. However, the concerned

State Pollution Control Boards/ Committees specified by the Central Government (for

UTs) may conduct random checks or call for information from any unit and make a

formal consent order prescribing conditions etc. as required.

List of Highly Polluting Industries

1. Fertilizer (Nitrogen/ Phosphate)

2. Sugar

3. Cement

4. Fermentation and Distillery

5. Aluminium

6. Petro chemicals

7. Thermal power

8. Oil refinery

9. Sulphuric Acid

10. Tanneries

11. Copper Smelter

12. Iron & Steel

13. Pulp & Paper

14. Dye and Dye intermediates

15. Pesticides manufacturing and formulation

16. Basic Drugs and Pharmaceuticals

11. Common Effluent Treatment Plants (CETP): The Ministry of Environment and

Forests is implementing the scheme for setting up of Common Effluent Treatment

Plants (CETPs) in clusters of small-scale industrial units. The financial assistance under

this scheme towards the total cost of the project is as follows:

a. 25% as subsidy from both Central and State Governments;

b. 30% as loan at reduced rate of interest from the financial institutions and

c. 20% a contributions from individual units.

MIDC now levies a cess on water consumption by the industrial units to meet the

expenditure on effluent disposal system. SSI and members of CETP are given some

concessions. Training and awareness progammes for adoption of clean technology are

conducted by DC, SSI. A project “Waste Minimization in Small-Scale Industries” has

been launched by the Ministry with National Productivity Council a nodal agency

under the World Bank assisted Industrial Pollution Prevention Project. The main

objectives are development of communication strategy for launching an awareness

campaign on waste minimization and establishment and running Waste Minimization

Circles (WMC) in small-scale industries in the country.

12. Industry related Research Institutes: The council of Scientific and industrial

Research (CSIR), New Delhi, set up in 1942, is working under the Ministry of Science

and Technology, Government of India. It has continually been striving to promote the

development of indigenous technologies and utilization of indigenous resources. Over

the years, CSIR laboratories have developed new products, processes and technologies.

In the process, a network of 40 CSIR laboratories has acquired modern infrastructural

facilities and a multiplicity of skill bases. The CSIR has a pool of talented scientists and

technologists capable of providing R& D solutions relating to the industry sector.

CSIR has as its mission to provide scientific industrial R& D that maximizes the

economic, environmental and societal benefits for the people of India. The CSIR

Research market link ha been strengthened over a period of time. CSIR has signed four

MOUs for alliances with All India financial institutions and industry associations viz.

ICICI, SIDBI, CII, and FICCI. The alliances seek to synergise the core competencies of

each partner to mutual advantage.

13. Exemption and Preferential Treatment from Excise Duties: For SSI having

clearances in the financial year not exceeding Rs. 3 crores, there are two schemes:

a. First Clearances upto Rs. 100 lakhs – Nil rate of duty; Cenvat credit is not

permissible.

b. First Clearances upto Rs. 100 lakhs- 60% of Normal Duty; cenvat credit is

permissible.

14. Policy of Priority Credit: SSI units are entitled for priority sector lending from the

nationalized commercial banks on the pattern of agriculture. Out of 40% of bank

advances earmarked as priority sector lending about 15 to 17 % have been flowing to

SSI sector. Out of priority sector credit going to small-scale sector 40% is earmarked

for tiny units having investment in plant and machinery below Rs. 5 lakhs an another

20% for tiny units whose investment in plant and machinery ranges between Rs.5

lakhs to Rs.25 lakhs. For the current interest rate, it is advisable to contact the banks.

15. Initiative for credit: In order to ensure adequate and timely credit to the Sis Reserve

Bank of India had set up Nayak Committee in 1991. The Committee submitted its

report in 1992, which recommended inter alia, that commercial banks might provide

working capital to SSI units worked out at the rate of 20% of their annual turnover

subject to a limit of Rs.1 Crore. The limit of working capital has since been raised to

Rs. 5 Crores.

16. OTC Exchange of India (OTCEI) : The OTC Exchange of India has been setup by

leading Financial Institutions like UTI, IDBI, ICICI, LIC and GIC, expressively to

provide an ideal avenue for corporate of all the sizes, its special focus on small scale

companies to raise resources from the capital market.

The Exchange provides sophisticated trading mechanism like Bought Out deals,

market making and sponsorship, which makes it very convenient for the small, and

medium sized companies to access the capital market

It is the only exchange-allowing nation wide as well as regional listing for smaller

companies. The minimum requirement of Rs. 30 Lakhs of post issue paid up capital for

a company too list on exchange facilities even small enterprise promoters to set up new

venture or expand their activities.

The Exchange also provides its constituents with the advantage of trading in

innovative financial instruments like debentures, units of mutual funds, bonds and

other corporate papers.

The Exchange uses the state-of the-art technology and trading mechanism to promote

transparent and wide spread transactions across the country.

OTC Exchange of India has a memorandum of Understanding with NASDAQ, USA,

which entails mutual exchange of information, training in various aspects of capital

market and access to the global market.

17. The interest on Delayed Payment Act: “The interest on Delayed Payment to Small-

Scale and Ancillary Industrial Undertaking Act” was enacted in 1993. in order to

tackle the problem of settlement of dues from companies, the Act has been amended so

that SSI units are not handicapped by delays in the settlement of their dues from larger

companies. The amended Act has come into force from 10th August, 1998. the

amended Act provides for:

a. Change in the penal rate of interest from the present 5 percentage points above the

floor rate which was applied hitherto, to 150% of the Prime Lending Rate (PLR)

of SBI;

b. The agreed date of settlement of dues (i.e., any contract between the SSI supplier

and the large-scale buyer) not to exceed 120 days from the date of acceptance of

goods by the large companies;

c. An additional/alternative mechanism of arbitration and conciliation to resolve

disputes between the SSI supplier and the large-scale buyer within the framework

of the Arbitration and Councils with the Director of Industries of the concerned

State Government as Chairman and representatives of Banking/Financial

Institutions, industry associations and persons with knowledge of industry and /or

law a its members to deal with issues/disputes which arise due to

nonpayment/delayed payment of the dues of SSI units/suppliers by large company

customers/buyers.

Recent Changes (2.10.2006)

Provisions to Check Delayed Payments

Provisions related to delayed payments to micro & small enterprises (MSEs)

strengthened.

Period of payment to MSEs by the buyers reduced to forty-five days.

Rate of interest on outstanding amount increased to three times the

prevailing Bank Rate of Reserve Bank of India, compounded on monthly

basis.

Constitution of MSE Facilitation Council(s) mandatory for State

Government.

Reference made to the Council to be decided within ninety days from the

date of reference.

Declaration of payment outstanding to MSE supplier mandatory for buyers

in their annual statement of accounts.

Interest (paid or payable to supplier) disallowed for deduction for income

tax purposes.

No appeal against order of Facilitation Council to be entertained by any

Court without deposit of 75% of the decreed amount payable by buyer.

Appellate Court may order payment of a part of the deposit to the supplier

MSE.

Disclosure of delayed payments and interest mandatory in the Annual

Accounts, wherever audit provision is applicable.

18. SIDBI Strategic Initiatives (Others)

A. Modernization and Technology Upgradation

B. Marketing Finance

C. Development of Industrial Infrastructure

D. Bills Discounting and Factoring service

E. National Venture Fund for Software and IT Industry

F. Credit Rating for Exporting SSI units

G. Incubation Centers

There are some other promotional measures being offered or monitored by SIDBI. Please

see the details in Chapter No.8

19. Sector Based Incentives: Special incentives are being announced for sunrise sectors

or the high thrust sectors which includes capital subsidy also. It is advisable to search

the website address of the office of the Development Commissioner, SSI

(www.smallindustryindia.com)

Promotional and Financial Incentives in Maharashtra

(Valid upto 31st march 2011)

1. Industrial Promotion Subsidy: Maharashtra

a. New SSI/MSI/LSI (including IT/BT) units

New projects, which are set up in these categories in different parts of the State,

will be eligible for Industrial Promotion Subsidy (IPS). The quantum of subsidy

will be linked to the Fixed Capital Investment. Payment of IPS every year will be

equal to 25% of any Relevant Taxes paid by the eligible unit to the State or to

any of its departments or agencies. The quantum of benefit and period will be

as follows:

Taluka / AreaClassification

Ceiling as % of FixedCapital Investment

Number of Years

SSI MSI / LSI SSI MSI / LSI

A - - - -

B 20 - 06 -

C 30 20 07 05

D 40 25 08 06

D+ 50 30 09 07

NID 60 35 10 08

b. Expansion Units

Existing SSI/MSI/LSI (including IT/BT) units making additional investment to the

extent of 25% or more over the Gross Fixed Capital investment, as on the last date of

the previous financial year, for expansion, diversification or modernization, will also

be eligible to get the Industrial Promotion Subsidy equivalent to 75% of the

incentives admissible for new units. The admissible period for availing the subsidy

will be reduced by one year in the respective category and area.

Explanation The Zero Vat Units will be eligible for getting employment based

incentive in lieu of IPS as proposed for low HDI districts in the form of 75%

reimbursement of expenditure on account of contribution towards Employees State

Insurance (ESI) and Employees Provident Fund (EPF) Scheme for a period of 5 years.

However the quantum of incentives for these units will be limited to 20%, 30%, 40%,

50%, 60% of FCI in “B”, “C”, “D”, “D+”, No Industry District respectively whichever

is lower.

2. Additional Incentives

The eligible SSI units coming up in Industrial Clusters / Parks to be notified by the

State Government and in Agro-based Industries, Textiles, Auto & Auto components,

Electronic products, Pharmaceuticals and Gems & Jewellery, Services – Information

Technology, I.T. enabled services, Biotechnology sectors in “C”, “D”, “D+” areas only

will be eligible for the IPS applicable to the one step higher incentive category under

clause 1.

3. Special Incentive for Units coming up in Districts low in HDI

The State Government will make special efforts for speedier economic development in

the 10 districts lowest in the State on the Human Development Index as given in the

Table I. It is proposed to offer the following employment based incentives to the units

coming up in these districts.

New units setting up facilities in these notified districts and employing at least 75%

local persons as defined in the Employment of Local Persons Policy will be offered

75% reimbursement of expenditure on account of contribution towards Employees

State Insurance (ESI) and Employees Provident Fund (EPF) Scheme for a period of 5

years. However these benefits will be limited to 25% of FCI. The amount of

reimbursement will be paid annually based on minimum statutory limit subject to the

condition that the unit has paid its contribution towards ESI & EPF on the due dates.

The procedural modalities of giving this employment incentive will be issued by the

Development Commissioner (Industries).

4. Mega Projects

Industrial projects with investment more than Rs.500 crores or generating

employment for more than 1000 persons in A and B areas or investment more than

Rs.250 crores or generating employment for more than 500 persons in rest of

Maharashtra will be termed “Mega Projects” and would be eligible for customized

package of incentives. The industrial projects coming up in the 10 low HDI districts

mentioned in the Table with investment of more than Rs.100 crore or generating

employment for more than 250 persons would also qualify for customized package of

incentives. The quantum of incentives within the approved limit will be decided by the

High Power Committee under the chairmanship of Chief Secretary, Government of

Maharashtra. The Infrastructure Committee under the chairmanship of the Chief Minister

of the State will have the power to customize and offer special/extra incentives for the

prestigious Mega Projects on a case by case basis.

5. Interest Subsidy

All new eligible units in textile, hosiery, knitwear and readymade garment sector units

in the SSI sector will receive interest subsidy. The Interest Subsidy will be payable only

on the interest actually paid to the Banks and Public Financial Institutions on the term

loan for acquisition of fixed capital assets, equal to the interest payable at 5% per

annum as stated in the table below.

Taluka / AreaClassification

Monetary CeilingLimit (Rs. In Lakhs)

Maximum PeriodIn Years

A - -

B - -

C 10 04

D 20 05

D+ 25 06

NID 35 07

6. Exemption from Electricity Duty

Eligible new units in C, D, and D+ areas and No-Industry District(s) will be exempted

from payment of Electricity Duty for a period of 15 years. In other parts of the State,

100% Export Oriented Units (EOUs), Information Technology (IT) and Bio-Technology

(BT) units will also be exempted from payment of Duty for a period of 10 years.

7. Waiver of Stamp Duty

The 100% exemption from Stamp duty will be extended up to 31st March 2011 in “C, D,

D+ Talukas and No Industry Districts. However, in A and B areas, stamp duty exemption

would be available as follows:

•BT and IT units in public IT Parks : 100%

• BT and IT units in private IT Parks : 75%

• Mega Projects : 50%

8. Exemption of payment of Royalties/NA charges

Units in MIDC areas/Cooperative Industrial Estates will be exempted from payment of

Non Agricultural Assessment Charges. Royalty payable on minor minerals extracted

during construction under taken in MIDC area as well as in Cooperative Industrial

Estates will be 100% exempted.

9. Royalty Refund

All eligible units, (new as well as units undertaking expansion) in Vidarbha region will

be eligible for refund of royalty paid on purchase of minerals from mine owners within

the State of Maharashtra for a period of five years from commencement of production.

10. Refund of Octroi/Entry Tax in lieu of Octroi

Octroi based incentive will continue to be offered by way of refund of Octroi Duty/Entry

Tax etc. An eligible unit, after it goes into commercial production, will be entitled to

Refund of octroi duty, or any entry tax or account based cess levied by the municipal

bodies in lieu of octroi and paid to the local authority on import of all the items required

by the Eligible Unit. This incentive will be admissible in the form of a grant restricted to

100% of the admissible Fixed Capital Investment of the Eligible Unit for a period of

5/7/9/12/15 years respectively in the B/C/D/D+/NID areas.

11. Octroi Exemption on Raw Materials

Several manufacturing units in the Municipal Corporation limits are facing acute

problem on account of high incidence of octroi. Some units have already shifted while

others are planning to relocate even outside the State. This migration would result in

rendering a large number of employed persons jobless. It is, therefore, proposed to

exempt 100% the octroi payable on all raw materials used by units in Municipal

Corporation areas for manufacture of products to be exported out of the limits of the

Municipal Corporations. The burden of such exemption will have to be borne by the

concerned Municipal Corporations.

12. Modification in Seed Money Scheme

Under the Seed Money Scheme, the educated unemployed youths are getting seed

money assistance between 10% to 22.5% of the project cost limited to a maximum of

Rs.10 lakhs for starting self-ventures from the Directorate of Industries as margin

money. The seed money assistance carries interest @ 10% p.a. with a rebate of 3% for

prompt payment. At present penal interest @14% is charged on delay in payment of

the seed money dues. It is proposed to carry out the following modifications in the Seed

Money Scheme:

• Quantum of Seed Money Assistance : Maximum amount Rs.25 lakhs

• Interest rate : 6%

• Penal rate : 1%

13. Strengthening the SME Sector

Looking at the impressive growth which the SME sector has registered in the last few

years, especially in the field of light engineering, textiles, biotech and IT, the State

Government will give special focus on the SME sector to achieve its objective of high

growth with greater employment opportunities. The Government will, therefore, initiate

measures to address the challenges faced by the SME sector in the areas of availability

of cheap and timely finance, technology ugradation, upgradation of skill sets of those

employed in this sector and marketing. The State will also take all necessary measures

to complement the initiatives proposed by the Central Government in its Small &

Medium Enterprises Bill, including setting up of a special institution for the SMEs. It

will also provide the following incentives to promote quality competitiveness, research

and development and technology upgradation

• 5% subsidy on capital equipment for technology up gradation limited to Rs.25 Lakhs.

• 50% subsidy on the expenses incurred for quality certification limited to Rs.1 Lakh.

• 25% subsidy on cleaner production measures limited to Rs.5 Lakhs.

• 50% subsidy on the expenses incurred for patent registration limited to Rs.5 Lakhs.

Prospects and Outlook for SSI

Changes in the Macro Business Environment are reflected in the Union Budget.

Announcement of a comprehensive policy package for SSI and tiny sector by the Prime

Minister on 30th August 2000 reflected the changes in the macro environment. Important

fall out were:

SSI exemption limit for excise duty raised from Rs. 50 lakhs to Rs. 1 crore.

Capital Subsidy of 12 % fro investment in Technology in select sectors.

Group set up to recommend streamlining of Inspections.

Continuation of Scheme of granting subsidy for opting ISO 9000 Certification.

In the National Equity Fund Scheme, the project cost limit revised from Rs. 25 lakhs to

Rs. 50 lakhs.

The eligibility limit for coverage under the Credit Guarantee Scheme enhanced to Rs.

25 lakhs.

Self-certification to be encouraged in lieu of inspection.

The Integrated Infrastructure Development (ID) Scheme to progressively cover all

areas in the country with 50 % reservation for rural areas.

Setting up of Incubation Centers in sunrise industries.

Overall budget strategy of Union Budget 2002-03 is quoted:

“In my last budget I had laid out a comprehensive agenda of the second-generation

economic reforms. I had also deepened tax reforms aimed at providing a modern tax

regime. My aim this year is to consolidate and implement these policies at all levels. I

propose to take the process further at the State level through a strategy of reform linked

public funding.

The broad strategy of the budget, therefore, is to:

Continue the emphasis on agriculture and food economy reforms

Enhance public and private investment in infrastructure

Strengthen the financial sector and capital markets

Deepen structural reforms and regenerate industrial growth

Provide social security to the poor

Consolidate tax reforms and continue fiscal adjustment at both the central and state

levels

Specifically related to SSI, the proposals announced were as under:

Small Scale Industries are now subject to increasing competition with the competition

of trade liberalization. A new approach to the promotion of small-scale industries

therefore, has already been adopted.

Adequate credit flow is essential for the small-scale sector. The net bank credit

outstanding to small scale industries increased from Rs. 45,890 crore on March 31,

2002 to Rs. 48,445 crore on March 31,2003. In order to further increase the flow of

credit:

o The limit for composite loans has been increased from Rs. 2 lakh to Rs. 5 lakh

o 391 specialised branches of public sector banks have been opened for small-

scale industries as September 30,2001.

o The exemption limit for collateral security has been increased from Rs. 25,000

to Rs. 5 lakh. The project cost limit under the National Equity Fund has been

from Rs. 25 lakh to Rs. 50 lakh

o The extension of credit to SSI has already been facilitated through the Credit

Gaurantee Scheme and Credit Lined Capital Subsidy Scheme for Technology

Upgradation

o Encouraged by the Kisan Credit Card Scheme, public sector bans have now

decided to introduce a scheme called Laghu Udyami Credit Card (LUCC)

Scheme for providing simplified and borrower friendly credit facilities to

small businessmen, retail traders, artisans and small entrepreneurs,

professional and other self employed persons, including those in the tiny

sector.

Members will recall that last year I had announced the dereservation of 14 items in the

footwear, leather goods and toy sectors. The Government has been engaged in

discussions with the stake holds in respect of certain other items in the reserved list.

Over 50 items of knitwear, certain agricultural implements, auto components, some

chemicals and drugs, and others will now be dereserved.

TAX PROPOSALS

The Excise duty exemption scheme for the small-scale sector is applicable to granite.

In view of the fact that it is not available to marble, I propose to withdraw this

exemption from granite also.

The justification of taxing more services does not require any elaboration. This year, I

propose to extend the service tax to the following services”

o Life Insurance, including insurance auxiliary services relating to life insurance

o Inland cargo handling

o Storage and warehousing services (except for agriculture produce and cold

storages)

o Event Management

o Rail travel agents

o Health Clubs and Fitness centers

o Beauty Parlours

o Fashion Designers

o Cable Operators

o Dry Cleaning service

The small-scale industry sector has been making an important contribution to

economic growth, and deserves continued support. In order to enable the Small

Industries Development Bank of India (SIDBI) to augment its resources and provide

cheaper credit to the small scale sector, I propose to allow capital gains exemption

under section 54EC of the Income-tax Act to amounts invested in bonds issued by

SIDBI.

A deduction of 50% of the profits earned by units setting up and operating large

conversion centers will be allowed by 5 years under section 80 IB.”

Union Budget 2003-04 identified 5 objectives (Panch Priorities):

1. Poverty education; addressing the ‘life time concerns’ of our citizens, covering health,

housing, education and employment;

2. Infrastructure Development

3. Fiscal consolidation through tax reforms and progressive elimination of budgetary

drags, including reforms of the additional excise duty, introduction of service tax, and

introduction of Value Added Tax (VAT) from April 1, 2003 at the State level.

4. Agriculture and related aspects including irrigation; and

5. Enhancing manufacturing sector efficiency, including promotion of exports and

further acceleration of the reform process.

The Finance Minister further said:

The essential entrepreneurial character and the creative genius are our greatest asset.

This energy has to be released.

A second revolution, to follow the earlier Green Revolution is the vital need of today.

But neither in agriculture, not in industry, shall we be able to attain our objective, if

infrastructure, both physical and social, is not rapidly and efficiently developed.

The core need in the country is realizing national creativity

Despite the agriculture GDP decline of an estimated 3.1 %, caused entirely by a large

decline in crop output, the country, registered a real growth of 4.4 % in GDP, net of

inflation. Growth rates of industry (6.1%) and services (7.1 %) accelerated very

encouragingly, as did exports by a healthy 20.4%

Related to SSI, the announcements were as under:

A vibrant small-scale industry, contributing to both industrial and export growth, is

critical for sustained growth in income and employment. The full benefits of the

declining rates of interest have percolated neither to agriculture, nor to small-scale

industry. The recent announcement by State Bank of India and decision by the Indian

Bank Association about an interest rate band of 2 % above and below PLR for secured

advances will help the SSI sector in obtaining bank finance at moderate rates of

interest. In addition, benefits and entitlements available to this sector shall be placed

on the Ministry’s website, for ready reference.

Accessing the global market with consumer goods of quality, at competitive prices,

produced in both large and small-scale establishments operating under flexible

conditions, is the goal that we need to target. Last year, Government had announced

the dereservation of over 50 items. After consultations with stakeholders in respect of

certain other items in the reserved list, it is now proposed to withdraw SSI reservation

from another 75 items of laboratory chemicals and reagents, leather and leather

products, plastic products, chemicals and chemicals product and paper products. To

help further investment in the SSI sector, Government will examine the question of a

limited partnership act.

Union Budget 2004-05: SSI & Entrepreneurship

Economic Survey 2003-04 Mentions: Among the other factors that can help in boosting

industry is the removal of the remaining items from the list reserved for small-scale

industry. Small and Medium Scale enterprises are critical for industrial development, for

they provide the cradle that nurtures the big businesses of tomorrow. They choose the

appropriate product designs and techniques, be it labour or capital intensive, and they have

flexible management capacities to respond to fast-changing market conditions. The

progress in gradually dismantling the reservation policy observed over recent years should

continue and the policy of protection through reservation should be replaced by promotion

as the cornerstone of future policy. Adequate supply of credit services, technology

assistance and infrastructure, low transaction costs are aspects upon which this promotion

policy should focus.

National Common Minimum Programme: The Guiding Light

The United Progressive Alliance (UPA) has given to itself, and to the people of this

country, a Common Minimum Programme. The government has since adopted it as the

National Common Minimum Programme (NCPM). The programme spells out seven clear

economic objectives:

1. Maintaining a growth rate of 7-8% per year for sustained period

2. Providing universal access to quality basic education and health

3. Generating gainful employment in agriculture manufacturing and services, and

promoting investment

4. Assuring 100 days’ employment to the bread-winner in each family at the minimum

wage

5. Focusing on agriculture and infrastructure

6. Accelerating fiscal consolidation and reform

7. Ensuring higher and more efficient fiscal devolution.

Agri-business

The Small Farmers Agri-business Consortium (SFAC) was set up in 1994. Although SFAC

started functioning from 1998, its corpus stands at a meager Rs. 10.95 crore. SFAC should

provide venture capital to projects and must be run, preferably by a banker, on purely

business lines. The M S Swaminathan Research Foundation has identified 13 districts

where there is a huge potential for agri-businesses and an appetite for investment of nearly

Rs. 170 crore. The ministry of agriculture has initiated action to improve the governance of

SFAC, including the appointment of a banker as the chief executive. It is proposed to

provide the necessary additional capital that SFAC will require to aggressively promote

agri-businesses.

Small Scale Industry

Small-scale industry is and must be regarded as, an engine of growth. At the same time SSI

units must also be given the space to grow into medium enterprises. World over, policies

are devised to meet the requirements of small and medium enterprises (SME). Keeping in

mind the twin objectives, the ministry of small-scale industry has identified 85 items that

can be safely taken out of the reserved list. Furthermore, it is felt that technology

upgradation of SSI units is the most urgent requirement to do business in a competitive

environment. According to reviewed Capital Subsidy scheme, the proposal is to raise the

ceiling for loans under the scheme from Rs 40 lakh to Rs. 1 crore. The rate of subsidy will

also be raised from 12 % to 15 %. The scope of the scheme will be enlarged by adding

more sub-sectors and technologies eligible for assistance. SSI units will be encouraged to

obtain credit rating. With these measures it is expected that many more SSI units will

benefit from the restructured scheme. A provision of Rs. 135.24 crore has been made for

“Promotion of SSI Schemes”, and within that amount funds will be found for the Capital

Subsidy Scheme.

Regeneration of Traditional Industries

Some of our traditional industries, namely coir, handloom, handicraft, sericulture, leather,

pottery and other cottage industries not only contain great potential for growth and exports,

but are integral for maintenance of our cultural heritage. Accordingly, a fund for the

Regeneration of Traditional Industries, with an initial allocation of Rs. 100 crore will be set

up.

SSI Sector in Union Budget 2005 – 06

SSI turnover eligibility limit for availing General SSI Excise Exemption enhanced

from Rs. 3 crores to 4 crores. Further SSI units will now have only two options: either

full exemption on the first clearance of Rs. 1 crore or normal duty on the first

clearance of Rs. 1 crore with CENVAT credit.

108 items de – reserved which include 30 textile products including hosiery.

Small service providers having gross annual turnover less than Rs. 4lakhs have been

exempted from purview of service Tax.

Service Tax on business auxiliary service has been exempted for person producing /

processing goods, from the inputs received from a manufacture and sending the

resultant product to the same manufacture for further manufacture of final products,

which are cleared on payment of excise duty.

A provision of Rs. 173 crores made for promotion of SSI Scheme.

SME growth fund to be created by SIDBI with a corpus of Rs. 500 crores to provide

equity support to small and medium units in knowledge based industries such as

Pharma, Biotechnology and IT Sector.

The Small and Medium Enterprises Development Bill to be introduced during the

current session of the Parliament.

As proposed by the National Commission on Enterprise in the Unrecognized/informal

Sector, pilot projects for creation of “growth poles” applying the Provision of Urban

Amenities in Rural Areas (PURA) principles will be taken up in 2005-06 to expand

production and employment in the un recognized enterprises around existing clusters

of industrial activities and services around existing clusters of industrial activities and

services as well as encourage the formation of new clusters.

The target for Credit Linking of Self-Help Groups (SHGs) enhanced as well as

enhanced from 2 lakhs SHGs to 2.5 lakhs SHGs.

Micro Finance Institutions (MFIs), which seeks to provide Small Scale Credit and

other financial service to low income households and small informal business to be

promoted in a big way.

Rs.100 crores Micro Finance Development Fund to be redesignated as Micro Finance

Development Equity Fund and the corpus will be enhanced to Rs. 200 crores.

RBI to open a window to enable qualified NGOs engaged in micro finance activities

to use the External Commercial Borrowing (ECB) window.

In order to revive the manufacturing sector, particularly small and medium enterprises

and to unable them to adjust to the competitive pressure caused by the liberalization

and modernization of tariff rates a new scheme called Manufacturing Competitive

Programme to be launched to strengthen operations and sharpen competitiveness. The

design of the scheme will be worked out by the National Manufacturing

Competitiveness Council.

Cluster development approach is to be adopted for production and marketing of

handloom products.

Peak rate of custom duty for non – agriculture products reduced from 20% to 15%.

The custom duty on seven specified machinery for leather and footwear industry

reduced from 15% to 10%.

Custom duty on nine specified machinery used in pharmaceutical and biotechnology

sector reduced to 5%.

For primary and secondary metals customs duty reduced from 15% to 10%.

Industrial raw materials such as catalysts, refractory raw materials, basic plastic

materials, molasses and industrial ethyl alcohol – key inputs to manufacture, will

have reduced custom duty of 10%. On lead, custom duty is reduced to 10%.

Custom duty on cooking coal is reduced from 15% to 5%.

4% Countervailing Duty (CVD) imposed on the imports of Information Technology

Agreement (ITA) bound items and their inputs that attract ‘nil’ duty.

Excise duty reduced from 16% to 8% on imitation jewellery.

8% excise duty imposed on Mosiac Tiles.

Surcharge of Re. 1 per kg on tea abolished.

Excise duty of Re.1 per kg. on refined edible oils and Rs. 1.25 per kg. on Vanaspati

withdrawn.

Excise duty reduced from 16% to 12% on matches made in mechanized and semi –

mechanized sector.

Excise duty on Iron & Steel restored to the normal level of 16%.

An Advisory Committee to be set up to advice the government on the extent of

abatement for excise duty and service tax.

To Summarize

The process of liberalization, while providing tremendous opportunities, has thrown

up new challenges for the Indian small-scale industries sector.

For SSIs’ the globalization of economic activities has two interfaces. For some, the

process opens new opportunities to expand and grow; for others, a much larger group,

the process poses a threat from abroad.

In view of emerging WTO regime and a high-level reservation redundancy, there may

be a need reconsider orienting of the existing Government policies so as to achieve a

phased dereservation. The Report of the Expert Committee on Small Enterprises

(1997) strongly favoured total dereservation based on the ineffectiveness of the

policy.

Recent Announcements (2.10.2006)

Central Government shall constitute a National Board for Micro, Small and

Medium Enterprises for promotion and development. The Board shall also review

policies and programmes to enhance the competitiveness of such enterprises

Central Government shall also constitute an Advisory Committee. The committee

shall advise on

(a) the level of employment in a class or classes of enterprise;

(b) The level of investments in plant and machinery or equipment in a class or

classes of enterprises;

(c) The need of higher investment in plant and machinery or equipment for

technological upgradation, employment generation and enhanced

competitiveness of the class or classes of enterprises;

(d) The possibility of promoting and diffusing entrepreneurship in micro, small

or medium enterprises; and

(e) The international standards for classification of small and medium

enterprises.

The focus shall be on:

Development of skills in the employees, managers and entrepreneurs of

micro & small enterprises.

Technological upgradation.

Marketing assistance

Infrastructure facilities

Cluster development

Credit

The policies and practices in respect of credit to the MSMEs shall be progressive

and such as may be specified in the guidelines or instructions issued by the Reserve

Bank of India with the aims of:

Ensuring smooth credit flow to the MSMEs,

Minimizing sickness among them, and

Ensuring enhancement of their competitiveness.

Procurement Policies

Central Government or a State Government to notify preference policies in

respect of procurement of goods and services, produced and provided by

MSEs, by its ministries, departments or its aided institutions and public

sector enterprises (non-statutory till now).

Valid only for Micro and Small Enterprises and not for Medium Enterprises.

Services also covered.

Support Organizations for an Entrepreneur and their Role

OVERVIEWOVERVIEW

CENTRAL GOVERNMENT

1. SSIB 2. SIDO3. SISI 4. PPDC

SSIs

STATE GOVERNMENT

1. DC(SSI)2. DIC3. SFC4. SSID5. TCO

OTHERS1. Industry

Associations2. Non -

Governmental Organizations

Glossary of Abbreviations used:Glossary of Abbreviations used:

DC (SSI) DC (SSI) Development Commissioner for SSIDevelopment Commissioner for SSI

DIC DIC District Industries CenterDistrict Industries Center

EDIIEDII Entrepreneurship Development Institute of IndiaEntrepreneurship Development Institute of India

EDI EDI Entrepreneurship Development InstituteEntrepreneurship Development Institute

EPC EPC Export Promotion CouncilExport Promotion Council

FTS FTS Field Testing StationField Testing Station

HUDCOHUDCO Housing and Urban Development CorporationHousing and Urban Development Corporation

NABARD NABARD National Bank for Agricultural and Rural DevelopmentNational Bank for Agricultural and Rural Development

NIESBUD NIESBUD National Institute for Entrepreneurship & Small Business National Institute for Entrepreneurship & Small Business

DevelopmentDevelopment

(At the Apex Level : SIDBI)

FINANCEApexSIDBIBanksCommercial BanksRRBCo-op BanksState Level1. SFC2. SIDC3. SIIC4. SSIDCOthersNABARDNSIC

TECHNOLOGY UPGRADATION

NSICSIDOSISITBSE

INDUSTRIAL INPUTS

NSICSSIDCDIC

INDUSTRIALINFRASTRUCTURE

SSIDCSIDCHUDCOSEB

TECHNICAL TRAINING

TCOPPDCRTCFTSTR

ENTREPRENEURSHIPDEVELOPMENT

SIDOEDIINIESBUDEDISISI

MARKETING

SIDONSICSSIDCSISIEPC

SSIs

NSIC NSIC National Small Industries Corporation Ltd.National Small Industries Corporation Ltd.

PPDC PPDC Product and Process Development CenterProduct and Process Development Center

RRB RRB Regional Rural Bank *Regional Rural Bank *

RTC RTC Regional Testing CenterRegional Testing Center

SEB SEB State Electricity BoardState Electricity Board

SFC SFC State Financial Corporation Ltd. State Financial Corporation Ltd.

SIDBI SIDBI Small Industries Development Bank of IndiaSmall Industries Development Bank of India

SIDC SIDC State Industrial Development Corporation Ltd.State Industrial Development Corporation Ltd.

SIDO SIDO Small Industries Development OrganizationSmall Industries Development Organization

SIIC SIIC State Industrial and Investment Corporation Ltd.State Industrial and Investment Corporation Ltd.

SISI SISI Small Industries Service Institute Small Industries Service Institute

SSIBSSIB Small Scale Industries Board Small Scale Industries Board

SSIDC SSIDC State Small Scale Industrial Development Corporation Ltd.State Small Scale Industrial Development Corporation Ltd.

TBSE TBSE Technology Bureau for Small Enterprises Technology Bureau for Small Enterprises

TCO TCO Technical Consultancy OrganizationTechnical Consultancy Organization

TR TR Tool RoomsTool Rooms

SMALL INDUSTRIES DEVELOPMENTSMALL INDUSTRIES DEVELOPMENT ORGANIZATIONORGANIZATION

Government has been playing a major role. The Office of Development CommissionerGovernment has been playing a major role. The Office of Development Commissioner (SSI) has been functioning since 1954 along with the Ministry of Industry as an apex /nodal(SSI) has been functioning since 1954 along with the Ministry of Industry as an apex /nodal organ and provides link between the Ministry and field organizations.organ and provides link between the Ministry and field organizations.

At Central Level, along with Ministry of Industry an exclusive Department of Small ScaleAt Central Level, along with Ministry of Industry an exclusive Department of Small Scale & Agro and Rural Industries has been created since 1954 for the promotion and& Agro and Rural Industries has been created since 1954 for the promotion and development of small-scale industries. Presently it is being headed by a Minister of Statedevelopment of small-scale industries. Presently it is being headed by a Minister of State with independent charge.with independent charge.

The Small Industries Development Organization (SIDO) headed by the AdditionalThe Small Industries Development Organization (SIDO) headed by the Additional Secretary & Secretary & Development Commissioner (DC-SSI)Development Commissioner (DC-SSI) is an apex body for formulating is an apex body for formulating policies for the development of SSI's in the country and is playing a very constructive rolepolicies for the development of SSI's in the country and is playing a very constructive role for strengthening this vital sector. It functions through a network of SISI’s, Branch SISI’s,for strengthening this vital sector. It functions through a network of SISI’s, Branch SISI’s,

Regional Testing Centers, Footwear Training Centers, Production Center, Field TestingRegional Testing Centers, Footwear Training Centers, Production Center, Field Testing Stations and specialized institutes. Stations and specialized institutes.

It renders services such as:It renders services such as:

Advising the Government in policy formulation for the promotion and development ofAdvising the Government in policy formulation for the promotion and development of SSI's.SSI's.

Providing techno-economic and managerial consultancy, common facilities andProviding techno-economic and managerial consultancy, common facilities and extension services to small-scale units.extension services to small-scale units.

Providing facilities for technology up gradation, modernization, quality improvementProviding facilities for technology up gradation, modernization, quality improvement and infrastructure.and infrastructure.

Human Resource Development through training and skill up gradation.Human Resource Development through training and skill up gradation. Providing economic information services.Providing economic information services. Maintaining a close liaison with the Central Ministries, Planning Commission, StateMaintaining a close liaison with the Central Ministries, Planning Commission, State

Governments, Financial Institutions and other Organizations concerned withGovernments, Financial Institutions and other Organizations concerned with development of SSI's.development of SSI's.

Evolving and coordinating Policies and Programmes for development of SSI's and ancillaries to large and medium scale industries.

Monitoring of PMRY Scheme.

SIDO has under its control:SIDO has under its control:

Regional Testing Centers (RTC) : Field Testing Stations (FTS) Tool Rooms / Tool Design Institutes (TRS / TDI) Product-Cum-Process Development Centers (PPDC)

SMALL INDUSTRIES SERVICE INSTITUTESMALL INDUSTRIES SERVICE INSTITUTE

The Small Industries Development Organization (SIDO) acts as a policy formulatingThe Small Industries Development Organization (SIDO) acts as a policy formulating agency, co-ordinating and monitoring the growth and development of small scale industriesagency, co-ordinating and monitoring the growth and development of small scale industries at the national level. It provides a wide range of extension services through the fieldat the national level. It provides a wide range of extension services through the field agencies viz. Small Industries Service Institutes, The Small Industries Service Institute,agencies viz. Small Industries Service Institutes, The Small Industries Service Institute, provides :provides :

Technical Consultancy Services Technical Consultancy Services Management Consultancy ServicesManagement Consultancy Services Economic Investigation ServicesEconomic Investigation Services Entrepreneurial Development Programme & Entrepreneurial Development Programme & PMRYPMRY Ancillary Development ProgrammesAncillary Development Programmes Marketing Assistance & ServicesMarketing Assistance & Services Export Promotion ServicesExport Promotion Services

Modernization / Technology Up-gradations ServicesModernization / Technology Up-gradations Services Common Facilities ServicesCommon Facilities Services Library FacilityLibrary Facility Assistance to the State Govt. AgenciesAssistance to the State Govt. Agencies Technical Assistance to the various Central Govt. Agencies Like Technical Assistance to the various Central Govt. Agencies Like DGFT, NSICDGFT, NSIC, Excise,, Excise,

BIS, CSIRBIS, CSIR, etc. and all sorts of assistance and support to various NGO’s, Associations, etc. and all sorts of assistance and support to various NGO’s, Associations & Institutes involved in promotion and development of industries.& Institutes involved in promotion and development of industries.

SISI, Mumbai has set-up a CAD/CAM Training Centre in collaboration with Indo-SISI, Mumbai has set-up a CAD/CAM Training Centre in collaboration with Indo-German Tool Room, Aurangabad. German Tool Room, Aurangabad.

SISI, Mumbai has also set-up a Toy Design cell in collaboration with National InstituteSISI, Mumbai has also set-up a Toy Design cell in collaboration with National Institute of Design, Ahmedabad.of Design, Ahmedabad.

SISI, Mumbai has set-up a Technology Resource Centre in Mumbai.SISI, Mumbai has set-up a Technology Resource Centre in Mumbai.

Further details on SISI can be obtained from:Further details on SISI can be obtained from:Small Industries Service Institute,Small Industries Service Institute,Ministry of Small Scale Industries,Ministry of Small Scale Industries,Government of India,Government of India,Kurla Andheri Road, Sakinaka,Kurla Andheri Road, Sakinaka,Mumbai – 400 072.Mumbai – 400 072.Phone no.:- +91-22-2857 6090, 2857 3091.Phone no.:- +91-22-2857 6090, 2857 3091.Fax:- +92-22-2857 8092.Fax:- +92-22-2857 8092.Website:- Website:- www.sisimumbai.comwww.sisimumbai.com..

www.smallindustryindia.comwww.smallindustryindia.com

NATIONAL SMALL INDUSTRIES CORPORATIONNATIONAL SMALL INDUSTRIES CORPORATION LIMITEDLIMITED

The genesis of the National Small Industries Corporation Ltd. (The genesis of the National Small Industries Corporation Ltd. (NSICNSIC) was a result) was a result of the recommendations of an International Planning Team, which visited India inof the recommendations of an International Planning Team, which visited India in 1954 sponsored by the Ford Foundation for suggesting ways for development of1954 sponsored by the Ford Foundation for suggesting ways for development of small scale industries. NSIC was registered in 1955 under the Companies Act small scale industries. NSIC was registered in 1955 under the Companies Act

NSIC PROVIDES FOLLOWING ASSISTANCE TO SSIS

Assistance to Small–Scale units in securing reasonable share of Government PurchasesAssistance to Small–Scale units in securing reasonable share of Government Purchases Government orders both by a system of corporation taking prime contracts and thenGovernment orders both by a system of corporation taking prime contracts and then

issuing sub-contracts or assisting the small scale units in getting contracts from theissuing sub-contracts or assisting the small scale units in getting contracts from the Government Purchase Agencies.Government Purchase Agencies.

Supply of machines both indigenous and imported to small scale industrial units on hireSupply of machines both indigenous and imported to small scale industrial units on hire purchase under easy installment repayment terms. purchase under easy installment repayment terms.

Scheme of providing machinery and equipment on lease terms for encouragingScheme of providing machinery and equipment on lease terms for encouraging technological up-gradation, modernization, expansion and diversification. Under thetechnological up-gradation, modernization, expansion and diversification. Under the scheme 100% finance is provided.scheme 100% finance is provided.

Marketing of the small scale industries products within the country by Marketing of the small scale industries products within the country by -formation of consortia of units manufacturing same or similar purchase products

-agency basis and -agency basis and -securing institutional orders-securing institutional orders- Export Marketing- Export Marketing

Export marketing is encouraged among small scale units who can gradually acquireExport marketing is encouraged among small scale units who can gradually acquire capability to independently handle the export of their products. Exports of the productscapability to independently handle the export of their products. Exports of the products as well as projects is undertaken.as well as projects is undertaken.

Allotment scarce raw materialAllotment scarce raw material Warehousing facilitiesWarehousing facilities

Marketing activities include arrangement of Buyer Seller meets, Trade Fairs both NationalMarketing activities include arrangement of Buyer Seller meets, Trade Fairs both National and International etc.and International etc.

Further details on NSIC can be obtained from:Further details on NSIC can be obtained from:National Small Industries Corporation,National Small Industries Corporation,Prestige Chambers, 3Prestige Chambers, 3rdrd Floor, Kalyan Street, Floor, Kalyan Street,Madjid Bunder, Mumbai – 400 009.Madjid Bunder, Mumbai – 400 009.Phone no.:- 2374 0272, 2374 0268, 2371 7725.Phone no.:- 2374 0272, 2374 0268, 2371 7725.E-mail: nsicmum@bom5.vsnl.net.in.E-mail: nsicmum@bom5.vsnl.net.in.

SMALL INDUSTRIES DEVELOPMENT BANK OFSMALL INDUSTRIES DEVELOPMENT BANK OF INDIA (SIDBI)INDIA (SIDBI)

In response to the long standing demand of the small scale sector in India, Small IndustriesIn response to the long standing demand of the small scale sector in India, Small Industries Development Bank of India (SIDBI) was set up, by an Act of Parliament, as an apexDevelopment Bank of India (SIDBI) was set up, by an Act of Parliament, as an apex institution for promotion, financing and development of industries in the small scale sectorinstitution for promotion, financing and development of industries in the small scale sector and for co-ordinating the functions of other institutions engaged in similar activities. SIDBIand for co-ordinating the functions of other institutions engaged in similar activities. SIDBI is a wholly owned subsidiary of Industrial Development Bank of India (IDBI). Itis a wholly owned subsidiary of Industrial Development Bank of India (IDBI). It commenced its operation on April 2, 1990 by taking over the outstanding portfolio andcommenced its operation on April 2, 1990 by taking over the outstanding portfolio and activities pertaining to the small-scale sector. SIDBI is operating through its Head Office atactivities pertaining to the small-scale sector. SIDBI is operating through its Head Office at Lucknow and a network of 5 Regional Offices and 33 Branch Offices in all the States.Lucknow and a network of 5 Regional Offices and 33 Branch Offices in all the States.

SIDBI under the Charter has, inter alia, been assigned the task of being the main purveyorSIDBI under the Charter has, inter alia, been assigned the task of being the main purveyor of term finance to the small-scale sector in the country. Small scale industrial units,of term finance to the small-scale sector in the country. Small scale industrial units, artisans, village and cottage industrial units in the tiny sector and small road transportartisans, village and cottage industrial units in the tiny sector and small road transport operators are extended financial assistance mainly by way of refinance through primaryoperators are extended financial assistance mainly by way of refinance through primary lending institutions (PLIs) viz., State Financial Corporation (SFCs), State Industriallending institutions (PLIs) viz., State Financial Corporation (SFCs), State Industrial

Development Corporations / State Industrial Investment Corporations (SIDCs /SIICs) andDevelopment Corporations / State Industrial Investment Corporations (SIDCs /SIICs) and banks, which have a wide network of over 65,000 branches. banks, which have a wide network of over 65,000 branches.

With a view to encouraging bills culture and helping the SSI units realize their saleWith a view to encouraging bills culture and helping the SSI units realize their sale proceeds of capital goods/equipment and component/sub-assemblies/intermediates, SIDBIproceeds of capital goods/equipment and component/sub-assemblies/intermediates, SIDBI directly discounts bills arising out of these transactions and also rediscounts those bills thatdirectly discounts bills arising out of these transactions and also rediscounts those bills that are discounted by the banks. In addition, SIDBI has also introduced direct finance schemesare discounted by the banks. In addition, SIDBI has also introduced direct finance schemes for specialized marketing agencies, sub-contracting/ancillary units and infrastructurefor specialized marketing agencies, sub-contracting/ancillary units and infrastructure development agencies so as to fill the gaps in these areas in the existing credit deliverydevelopment agencies so as to fill the gaps in these areas in the existing credit delivery mechanism. SIDBI has been providing assistance to well-run companies on a selectivemechanism. SIDBI has been providing assistance to well-run companies on a selective basis for acquiring machinery/equipment both indigenous and imported forbasis for acquiring machinery/equipment both indigenous and imported for modernization/expansion/diversification/balancing, etc. under Equipment Finance Schememodernization/expansion/diversification/balancing, etc. under Equipment Finance Scheme (EFS). Project loans are also considered on a selective basis. It also provides assistance for(EFS). Project loans are also considered on a selective basis. It also provides assistance for working capital, credit rating, quality certification and vendor development. Besides,working capital, credit rating, quality certification and vendor development. Besides, SIDBI operates a Venture capital fund for support to ventures in the small scale sectorSIDBI operates a Venture capital fund for support to ventures in the small scale sector which have special features in terms of technology, market prospects, return on investmentwhich have special features in terms of technology, market prospects, return on investment or entrepreneurial profile.or entrepreneurial profile.

SIDBI SCHEMES FOR THE SSI SECTOR

Over the years, the approach of the bank has been to identify the gaps in the existing creditOver the years, the approach of the bank has been to identify the gaps in the existing credit delivery systems for SSIs and devise tailor-made schemes not only for providing refinancedelivery systems for SSIs and devise tailor-made schemes not only for providing refinance but also for direct lending to SSIs. While extending direct assistance to SSIs, the Bank hasbut also for direct lending to SSIs. While extending direct assistance to SSIs, the Bank has been pursuing the policy of supplementing the efforts of PLIs. Each of Schemes of SIDBIbeen pursuing the policy of supplementing the efforts of PLIs. Each of Schemes of SIDBI is directed to mitigate specific problems faced by SSI sector such as delayed payment ofis directed to mitigate specific problems faced by SSI sector such as delayed payment of bills, obsolescence of technology, working capital requirements, marketing inadequacies,bills, obsolescence of technology, working capital requirements, marketing inadequacies, lack of inadequacies, lack of infrastructure, insufficient export capital, venture capital andlack of inadequacies, lack of infrastructure, insufficient export capital, venture capital and human resources development. (refer to the box below)human resources development. (refer to the box below)

Expanding ActivitiesExpanding Activities

DELAYED PAYMENT OF BILLS SCHEMESDELAYED PAYMENT OF BILLS SCHEMES

Direct Discounting of Bills (Components)SchemeDirect Discounting of Bills (Components)Scheme Direct Discounting of Bills (Equipments) SchemesDirect Discounting of Bills (Equipments) Schemes Direct Factoring ServicesDirect Factoring Services Bills Rediscounting Scheme (Equipments)Bills Rediscounting Scheme (Equipments) Bills Rediscounting Scheme against Inland Supply Bills of SSIsBills Rediscounting Scheme against Inland Supply Bills of SSIs Invoice Discounting SchemeInvoice Discounting Scheme

OBSOLESCENCE OF TECHNOLOGY SCHEMESOBSOLESCENCE OF TECHNOLOGY SCHEMES

Technology Development and Modernization Fund (TDMF) Scheme (both direct Technology Development and Modernization Fund (TDMF) Scheme (both direct and indirect assistance)and indirect assistance)

ISO 9000Scheme (both direct and indirect assistance)ISO 9000Scheme (both direct and indirect assistance) Technology Upgradation Fund Scheme for Textile Industry (both direct and indirect Technology Upgradation Fund Scheme for Textile Industry (both direct and indirect

assistance)assistance) Tannery Modernization Fund Scheme (both direct and indirect assistance)Tannery Modernization Fund Scheme (both direct and indirect assistance)

WORKING CAPITAL REQUIREMENT SCHEMESWORKING CAPITAL REQUIREMENT SCHEMES

Single Window Scheme (Through PLIs)Single Window Scheme (Through PLIs) Composite Loan Scheme (Through PLIs)Composite Loan Scheme (Through PLIs) Working Capital Term Loan (Direct Assistance)Working Capital Term Loan (Direct Assistance)

Marketing Inadequacies SchemeMarketing Inadequacies Scheme

Scheme for Financing Activities relating to marketing of SSI ProductsScheme for Financing Activities relating to marketing of SSI Products

Lack of suitable Infrastructure SchemesLack of suitable Infrastructure Schemes

Scheme of Direct Assistance for Development of Industrial Infrastructure for SSI Scheme of Direct Assistance for Development of Industrial Infrastructure for SSI SectorSector

Scheme of Integrated Infrastructural Development (IID)Scheme of Integrated Infrastructural Development (IID)

Insufficient Export Credit SchemesInsufficient Export Credit Schemes

Pre-shipment Credit in Foreign CurrencyPre-shipment Credit in Foreign Currency Scheme for Export Bills FinancingScheme for Export Bills Financing Rupee Pre-shipment/Post-shipmen CreditRupee Pre-shipment/Post-shipmen Credit Foreign Letters of CreditForeign Letters of Credit

Venture Capital Availability SchemesVenture Capital Availability Schemes Venture Capital SchemeVenture Capital SchemeHuman Resources Development SchemesHuman Resources Development Schemes Entrepreneurship Development ProgrammeEntrepreneurship Development Programme Small Industries Management ProgrammeSmall Industries Management Programme Skill-cum-Technology Upgradation ProgrammeSkill-cum-Technology Upgradation Programme

Over the years, SIDBI has widened its horizon and entered into newer areas with a view toOver the years, SIDBI has widened its horizon and entered into newer areas with a view to facilitating the growth of the SSI sector in the years to come. Apart from traditionalfacilitating the growth of the SSI sector in the years to come. Apart from traditional security – based project financing approach of Development Financing Institutions, SIDBIsecurity – based project financing approach of Development Financing Institutions, SIDBI commenced providing assistance in the form of venture capital, micro credit, marketingcommenced providing assistance in the form of venture capital, micro credit, marketing finance, export credit, etc. through specialized departments/outfits to accord focusedfinance, export credit, etc. through specialized departments/outfits to accord focused attention to the specific requirements of the sector.attention to the specific requirements of the sector.

SIDBI co-promoted SBI Factors and Commercial Services Limited, Canbank FactorsSIDBI co-promoted SBI Factors and Commercial Services Limited, Canbank Factors Limited, IDBI Bank Limited and North Eastern Development Finance CorporationLimited, IDBI Bank Limited and North Eastern Development Finance Corporation Limited. The Bank is also one of the founder members of the Indian InstituteLimited. The Bank is also one of the founder members of the Indian Institute Entrepreneurship, Guwahati. Entrepreneurship, Guwahati. During 1998-99, SIDBI has launched Rs.100 crore SIDBI Foundation for Micro Credit forDuring 1998-99, SIDBI has launched Rs.100 crore SIDBI Foundation for Micro Credit for up scaling micro finance activities and for creating a national network of strong, viable andup scaling micro finance activities and for creating a national network of strong, viable and sustainable micro finance institutions (MFIs) from formal and informal sector. Thissustainable micro finance institutions (MFIs) from formal and informal sector. This initiative gained world-wide recognition when SIDBI was awarded coveted Asian Bankinginitiative gained world-wide recognition when SIDBI was awarded coveted Asian Banking Award’99 in the Development Finance Product category. The Bank is the first institution toAward’99 in the Development Finance Product category. The Bank is the first institution to launch dedicated venture capital funds catering to the requirements of high growth sectorslaunch dedicated venture capital funds catering to the requirements of high growth sectors such as information technology and in collaboration with Central and State Governments.such as information technology and in collaboration with Central and State Governments. In order to pay specialized services and focused attention, separate subsidiaries viz. SIDBIIn order to pay specialized services and focused attention, separate subsidiaries viz. SIDBI Venture Capital Limited and SIDBI Trustee Company Limited were set up by the Bank.Venture Capital Limited and SIDBI Trustee Company Limited were set up by the Bank. Refer the table below:Refer the table below:

EXPANDING ACTIVITIES OF SIDBIEXPANDING ACTIVITIES OF SIDBI

Venture Capital Department (since 1992-93) – Two subsidiaries, viz. SIDBI VentureVenture Capital Department (since 1992-93) – Two subsidiaries, viz. SIDBI Venture

Capital Limited and SIDBI Trustee Company Limited formed to oversee :Capital Limited and SIDBI Trustee Company Limited formed to oversee :

Setting up Venture Capital FundSetting up Venture Capital Fund

Direct Venture Capital assistance and contribution to corpus of other Funds dedicatedDirect Venture Capital assistance and contribution to corpus of other Funds dedicated

to SSIsto SSIs

Launching SSI dedicated funds for Software/Information Technology sector.Launching SSI dedicated funds for Software/Information Technology sector.

12 Funds in 10 States and a national level Fund, viz. National Venture Fund for 12 Funds in 10 States and a national level Fund, viz. National Venture Fund for

Software and IT Industry in collaboration with Government of India.Software and IT Industry in collaboration with Government of India.

Technology Bureau for Small Enterprises (since 1994-95)Technology Bureau for Small Enterprises (since 1994-95)

Technology transferTechnology transfer

Match making servicesMatch making services

Finance syndicationFinance syndication

Facilitating joint ventures Facilitating joint ventures

Marketing Finance and Development Department (since 1995-96)Marketing Finance and Development Department (since 1995-96)

Setting up Marketing Development Assistance FundSetting up Marketing Development Assistance Fund

Direct assistance to SSIs for undertaking marketing related activitiesDirect assistance to SSIs for undertaking marketing related activities

Resource support to intermediaries Resource support to intermediaries

Developmental activities relating to Marketing of SSI products.Developmental activities relating to Marketing of SSI products.

International Finance Department (since 1996-97)International Finance Department (since 1996-97)

Pre-shipment / Post-shipment creditPre-shipment / Post-shipment credit

Foreign currency term loansForeign currency term loans

Foreign letters of creditForeign letters of credit

International Co-operation Division (since 1998-99)International Co-operation Division (since 1998-99)

Consultancy services Consultancy services

Institutional up gradation and training Institutional up gradation and training

Establishing lines of credit particularly for developing countriesEstablishing lines of credit particularly for developing countries

SIDBI Foundation for Micro Credit (since 1998-99)SIDBI Foundation for Micro Credit (since 1998-99)

Rs. 100 crore Fund for creating a national network of strong, viable and sustainable Rs. 100 crore Fund for creating a national network of strong, viable and sustainable

micro finance institutions (MFIs) from formal and informal sectormicro finance institutions (MFIs) from formal and informal sector

Financial support to MFIs for on-lending to poor (individuals/groups) with emphasis Financial support to MFIs for on-lending to poor (individuals/groups) with emphasis

on women for taking up income generating activities at micro levelon women for taking up income generating activities at micro level

Rating and capacity building of MFIsRating and capacity building of MFIs

STRATEGIC BUSINESS INITIATIVESSTRATEGIC BUSINESS INITIATIVES

The strategic business interventions were aimed at improving the flow of credit to smallThe strategic business interventions were aimed at improving the flow of credit to small scale sector by broad-basing certain schemes in tune with the changing requirements of thescale sector by broad-basing certain schemes in tune with the changing requirements of the sector. A number of steps aimed at enhancing the scale of operations under direct financesector. A number of steps aimed at enhancing the scale of operations under direct finance schemes have been initiated, which are likely to yield results in future. Besides, initiativesschemes have been initiated, which are likely to yield results in future. Besides, initiatives have been taken to revitalize the functioning of State Financial Corporations to facilitatehave been taken to revitalize the functioning of State Financial Corporations to facilitate their meeting emerging needs of the SSI sector. Emphasis was laid on liberalizing thetheir meeting emerging needs of the SSI sector. Emphasis was laid on liberalizing the schemes of assistance while simplifying the systems and procedures so as to make themschemes of assistance while simplifying the systems and procedures so as to make them market friendly and customer oriented.market friendly and customer oriented.

SEAF India SME FundSEAF India SME Fund

SIDBI entered into Memorandum of understanding with Small Enterprise Assistance FundsSIDBI entered into Memorandum of understanding with Small Enterprise Assistance Funds (SEAF) of United States of America. The Bank has, in-principle, agreed to contribute Rs. (SEAF) of United States of America. The Bank has, in-principle, agreed to contribute Rs. 25 crore to the initial corpus of the proposed SEAF India SME Fund of US$ 40 million. 25 crore to the initial corpus of the proposed SEAF India SME Fund of US$ 40 million. The Fund would be utilized towards equity and equity related investments in small and The Fund would be utilized towards equity and equity related investments in small and medium enterprises (SMEs) in India.medium enterprises (SMEs) in India.

Micro Ventures Innovation FundMicro Ventures Innovation Fund

Setting up of a micro venture capital fund for small innovations, in collaboration with theSetting up of a micro venture capital fund for small innovations, in collaboration with the National Innovation Foundation (NIF). A corpus of Rs. 500 lakhs is build up.National Innovation Foundation (NIF). A corpus of Rs. 500 lakhs is build up.

Tie-up with SEDFTie-up with SEDF

Memorandum of understanding focusing on economic development of North EasternMemorandum of understanding focusing on economic development of North Eastern Region of India was signed between SIDBI and South Asian Enterprise DevelopmentRegion of India was signed between SIDBI and South Asian Enterprise Development Facility (SEDF), an agency established by the World Bank and International FinanceFacility (SEDF), an agency established by the World Bank and International Finance Corporation. Two sub-sectors viz. food and fruit processing and silk have been identifiedCorporation. Two sub-sectors viz. food and fruit processing and silk have been identified for focused attention in the North Eastern Region.for focused attention in the North Eastern Region.

Resource Support involving Two Tier Credit DispensationResource Support involving Two Tier Credit Dispensation

SIDBI has been endeavouring to expand linkages with Public Financial Institutions (PFIs)SIDBI has been endeavouring to expand linkages with Public Financial Institutions (PFIs) for supplementing the existing partnership with Primary Lending Institutions. Towards thisfor supplementing the existing partnership with Primary Lending Institutions. Towards this end, the Bank had approach Government of India for specific authorization to considerend, the Bank had approach Government of India for specific authorization to consider financial assistance by way of resource support involving two-tier credit dispensation.financial assistance by way of resource support involving two-tier credit dispensation.

Technology Development and Modernization Fund SchemeTechnology Development and Modernization Fund Scheme

Technology Development and Modernization Fund (TDMF) Scheme was introduced byTechnology Development and Modernization Fund (TDMF) Scheme was introduced by SIDBI in April 1995 for a period of 5 years. The scheme was reviewed and it has beenSIDBI in April 1995 for a period of 5 years. The scheme was reviewed and it has been decided to continue it upto March31, 2005. Further the scope of the scheme has beendecided to continue it upto March31, 2005. Further the scope of the scheme has been enlarged to cover such service sector projects that are eligible for assistance from SIDBIenlarged to cover such service sector projects that are eligible for assistance from SIDBI like hospitals, nursing homes and tourism related activities on a selective basis.like hospitals, nursing homes and tourism related activities on a selective basis.

Service SectorService Sector

In the context of the important role played by entertainment industry in the small scaleIn the context of the important role played by entertainment industry in the small scale sector, SIDBI included establishing studios for making/producing films/software forsector, SIDBI included establishing studios for making/producing films/software for television, inter alia, for letting out the facilities to other producers on rent /fee basis, astelevision, inter alia, for letting out the facilities to other producers on rent /fee basis, as eligible activities for direct assistance from Bank.eligible activities for direct assistance from Bank.

Revision in Minimum Term Loan for Direct AssistanceRevision in Minimum Term Loan for Direct Assistance

The Bank reduced the minimum loan limit for direct assistance from SIDBI under ProjectThe Bank reduced the minimum loan limit for direct assistance from SIDBI under Project Finance Scheme (PFS) and Equipment Finance Scheme (EFS). Accordingly, the revisedFinance Scheme (PFS) and Equipment Finance Scheme (EFS). Accordingly, the revised limits for PFS and EFS are Rs. 50 lakhs.limits for PFS and EFS are Rs. 50 lakhs.

Export CreditExport Credit

SIDBI has been providing export credit to SSI exporters and export/Trading HousesSIDBI has been providing export credit to SSI exporters and export/Trading Houses sourcing their requirements from SSI units both in rupees and foreign currency. In additionsourcing their requirements from SSI units both in rupees and foreign currency. In addition to direct export credit, special emphasis was laid during the year on providing Lines ofto direct export credit, special emphasis was laid during the year on providing Lines of Credit in foreign currency to commercial banks and Factoring Companies for channelisingCredit in foreign currency to commercial banks and Factoring Companies for channelising resources for the benefit of SSI Sector.resources for the benefit of SSI Sector.

Refinance Scheme for Credit Linked Capital Linked Capital Subsidy Scheme froRefinance Scheme for Credit Linked Capital Linked Capital Subsidy Scheme fro Technology Upgradation of the Small Scale IndustriesTechnology Upgradation of the Small Scale Industries

As per decisions taken by the Governing and Technology Approval Board (GTAB), whichAs per decisions taken by the Governing and Technology Approval Board (GTAB), which monitors the scheme, certain changes as well as additional features have been incorporatedmonitors the scheme, certain changes as well as additional features have been incorporated in the scheme. Accordingly, the PLIs would henceforth release the entire subsidy amount toin the scheme. Accordingly, the PLIs would henceforth release the entire subsidy amount to the beneficiary units if the loan is disbursed in more than one installment, 50% of thethe beneficiary units if the loan is disbursed in more than one installment, 50% of the eligible subsidy may be released with the first installment and balance 50% along with theeligible subsidy may be released with the first installment and balance 50% along with the last installment. Existing SSI units which are likely to graduate to medium scale on accountlast installment. Existing SSI units which are likely to graduate to medium scale on account of additional loan will also now be eligible for assistance under the scheme.of additional loan will also now be eligible for assistance under the scheme.

Refinance Scheme-Increase in Exemption Limit fro CollateralsRefinance Scheme-Increase in Exemption Limit fro Collaterals

Pursuant to RBI guidelines to increase the limit of dispensation of collateral requirementPursuant to RBI guidelines to increase the limit of dispensation of collateral requirement for loans from existing Rs. 5 lakh to Rs. 15 lakh on the basis of good track record of thefor loans from existing Rs. 5 lakh to Rs. 15 lakh on the basis of good track record of the units, the Bank has decided to extend this benefit to all SSI units under the Refinanceunits, the Bank has decided to extend this benefit to all SSI units under the Refinance Scheme.Scheme.

Reduction in interest rate on past loansReduction in interest rate on past loans

In view of the general decline in the interest rates and requests made by borrowers toIn view of the general decline in the interest rates and requests made by borrowers to reduce interest rates in respect of loans contracted at higher rates in the past, a rebatereduce interest rates in respect of loans contracted at higher rates in the past, a rebate scheme was introduced by SIDBI in the previous year for loans carrying a rate higher thanscheme was introduced by SIDBI in the previous year for loans carrying a rate higher than 16.5 % per annum. With further reduction in interest rates during the year under review, the16.5 % per annum. With further reduction in interest rates during the year under review, the facility was extended in March 2003 to loans carrying interest rates of more than 15% perfacility was extended in March 2003 to loans carrying interest rates of more than 15% per annum.annum.

Rehabilitation of Sick SSI unitsRehabilitation of Sick SSI units

Based on the recommendation of a Working Group headed by Shri S.S. Kohli, the thenBased on the recommendation of a Working Group headed by Shri S.S. Kohli, the then Chairman, Indian Bank Association, RBI has issued fresh guidelines for rehabilitation ofChairman, Indian Bank Association, RBI has issued fresh guidelines for rehabilitation of sick SSI units, which, inter alia, include revision in definition of sick SSI unit. Accordingly,sick SSI units, which, inter alia, include revision in definition of sick SSI unit. Accordingly, this new definition has been adopted by SIDBI for purpose of Bank’s assistance and thethis new definition has been adopted by SIDBI for purpose of Bank’s assistance and the extant guidelines regarding grant of reliefs /concessions to potentially viable sick SSI unitsextant guidelines regarding grant of reliefs /concessions to potentially viable sick SSI units under the rehabilitation package have been reviewed and further liberalized.under the rehabilitation package have been reviewed and further liberalized.

Guidelines to BorrowersGuidelines to Borrowers

In continuation of ongoing efforts towards building better customer relationship andIn continuation of ongoing efforts towards building better customer relationship and educating its borrowers, the Bank has brought out a booklet titled “Guidelines to theeducating its borrowers, the Bank has brought out a booklet titled “Guidelines to the Borrower” enumerating the formalities to be completed by them for availing the term loanBorrower” enumerating the formalities to be completed by them for availing the term loan sanctioned by SIDBI. The booklet is given to borrowers after an in-principle decision issanctioned by SIDBI. The booklet is given to borrowers after an in-principle decision is taken to consider the proposal so as to aid speedy documentation and creation of security.taken to consider the proposal so as to aid speedy documentation and creation of security.

Recovery MeasuresRecovery Measures

During the year under review, detailed guidelines were issued for rehabilitation ofDuring the year under review, detailed guidelines were issued for rehabilitation of potentially viable sick assisted SSI units /concerns, including modification in the existingpotentially viable sick assisted SSI units /concerns, including modification in the existing guidelines.guidelines.

WTO Impact Assessment StudiesWTO Impact Assessment Studies

16 product groups have been identified within small-scale sector for assessing the impact of16 product groups have been identified within small-scale sector for assessing the impact of WTO on their competitiveness. The studies on six sub-sectors viz. Gems & Jewellery,WTO on their competitiveness. The studies on six sub-sectors viz. Gems & Jewellery, Leather and leather products, Dyes and dyes intermediates, Drug & Pharmaceuticals,Leather and leather products, Dyes and dyes intermediates, Drug & Pharmaceuticals, Textiles including Readymade Garments and Toys have been completed. SummarizedTextiles including Readymade Garments and Toys have been completed. Summarized versions of these Reports were distributed amongst various stakeholders. In the secondversions of these Reports were distributed amongst various stakeholders. In the second phase, SIDBI has initiated the studies on three more sub-sectors, viz. Food processing,phase, SIDBI has initiated the studies on three more sub-sectors, viz. Food processing, Biotechnology and Bicycle parts.Biotechnology and Bicycle parts.

Prepayment of Outstanding under RefinancePrepayment of Outstanding under Refinance

To enable SFCs reduce their cost of borrowings, the Bank decided to accept prepayment ofTo enable SFCs reduce their cost of borrowings, the Bank decided to accept prepayment of outstanding refinance, carrying interest at 13.5% per annum and above, without premium.outstanding refinance, carrying interest at 13.5% per annum and above, without premium. This facility, which was available upto March31, 2003, was also provided to StateThis facility, which was available upto March31, 2003, was also provided to State Industrial Development Corporations (SIDCs) and Twin Function Industrial DevelopmentIndustrial Development Corporations (SIDCs) and Twin Function Industrial Development Corporations (TFIDCs). The Bank also decided to accept prepayment of refinance, carryingCorporations (TFIDCs). The Bank also decided to accept prepayment of refinance, carrying interest of 13% per annum from the state level institutions at such premium as may beinterest of 13% per annum from the state level institutions at such premium as may be mutually agreed upon.mutually agreed upon.

Interest Rate StructureInterest Rate Structure

SIDBI effected downward revision in it Prime Lending Rates (PLRs) by 50 basis pointsSIDBI effected downward revision in it Prime Lending Rates (PLRs) by 50 basis points w.e.f. December 12, 2002. Accordingly, the Long Term PLR (for loans of maturity morew.e.f. December 12, 2002. Accordingly, the Long Term PLR (for loans of maturity more than 3 years), Medium Term PLR (for loans of maturity between 1 and 3 years) and shortthan 3 years), Medium Term PLR (for loans of maturity between 1 and 3 years) and short Term PLR (loans upto 1 year maturity) have been reduced to 12%, 11.75% and 11.25% perTerm PLR (loans upto 1 year maturity) have been reduced to 12%, 11.75% and 11.25% per annum, respectively. The corresponding reduction in interest rates has been effected acrossannum, respectively. The corresponding reduction in interest rates has been effected across

the board under various refinance and direct assistance schemes including products offeringthe board under various refinance and direct assistance schemes including products offering assistance at sub-PLR rates. The existing score chart system for direct assistance schemesassistance at sub-PLR rates. The existing score chart system for direct assistance schemes was also liberalized so as to offer more competitive rates to small scale units obtainingwas also liberalized so as to offer more competitive rates to small scale units obtaining direct loans from SIDBI.direct loans from SIDBI.

DEVELOPMENT AND SUPPORT SERVICESDEVELOPMENT AND SUPPORT SERVICES

Rural Industries ProgrammeRural Industries Programme

The Rural Industries Programme (RIP) of the Bank basically designed to provide impetusThe Rural Industries Programme (RIP) of the Bank basically designed to provide impetus to rural development by creating sustainable industrial ad service enterprises in rural areas,to rural development by creating sustainable industrial ad service enterprises in rural areas, leading to higher employment generation and effective utilization of local skills andleading to higher employment generation and effective utilization of local skills and resources. Considering its sizeable benefits, the Bank continued its thrust on upscaling andresources. Considering its sizeable benefits, the Bank continued its thrust on upscaling and geographical expansion of RIPs.geographical expansion of RIPs.

The Programme is designed to improve the quality of the product by introducing new toolsThe Programme is designed to improve the quality of the product by introducing new tools and processes, to reduce raw material wastage, and to impart skill development training toand processes, to reduce raw material wastage, and to impart skill development training to artisans in the cluster.artisans in the cluster.

Mahila Vikas NidhiMahila Vikas Nidhi

The Mahila Vikas Nidhi (MVN) provides a developmental window through which theThe Mahila Vikas Nidhi (MVN) provides a developmental window through which the Bank aims at bringing about economic empowerment of women by facilitating the creationBank aims at bringing about economic empowerment of women by facilitating the creation of appropriate infrastructure. During the year under review, assistance under MVN wasof appropriate infrastructure. During the year under review, assistance under MVN was extended to Helping Hands, BHEL Ladies Welfare Society, Bhopal forextended to Helping Hands, BHEL Ladies Welfare Society, Bhopal for setting-up/establishing a mini offset printing press for providing training in the field of off-setting-up/establishing a mini offset printing press for providing training in the field of off-set printing, computer designing, etc.set printing, computer designing, etc.

Entrepreneurship Development ProgrammeEntrepreneurship Development Programme

The Bank’s Entrepreneurship Development Programmes (EDPs) emphasis on promotion ofThe Bank’s Entrepreneurship Development Programmes (EDPs) emphasis on promotion of enterprises, especially in rural areas targeting less privileged sections of the society. Duringenterprises, especially in rural areas targeting less privileged sections of the society. During 2002-03, the Bank supported 128 EDPs taking the cumulative number of EDPs to 17092002-03, the Bank supported 128 EDPs taking the cumulative number of EDPs to 1709 comprising 779 programmes for rural youth, 331 fro women and 599 fro other groups.comprising 779 programmes for rural youth, 331 fro women and 599 fro other groups. These programmes are conducted through well-trained NGOs and specialized agencies, theThese programmes are conducted through well-trained NGOs and specialized agencies, the major ones being EDII, Ahmedabad and Rural Development and Self Employmentmajor ones being EDII, Ahmedabad and Rural Development and Self Employment Training Institute (RUDSETI), Ujire, Karnataka. Besides, the Bank continued to lendTraining Institute (RUDSETI), Ujire, Karnataka. Besides, the Bank continued to lend capacity building support to conducting agencies by way of trainers’ training, NGO-bankercapacity building support to conducting agencies by way of trainers’ training, NGO-banker interface, financial management programmes etc.interface, financial management programmes etc.

Human Resource DevelopmentHuman Resource Development

The Human Resource Development intervention of the Bank for the benefit of SSI sector isThe Human Resource Development intervention of the Bank for the benefit of SSI sector is undertaken through two structured mechanisms”undertaken through two structured mechanisms”(i)(i) The Small Industries Management Programme (SIMAP) which targets educatedThe Small Industries Management Programme (SIMAP) which targets educated

unemployed as well as industry-sponsored candidates with the Overall objective ofunemployed as well as industry-sponsored candidates with the Overall objective of providing competent managers to SSI sectorproviding competent managers to SSI sector

(ii)(ii) The Skill-cum-Technology Upgradation Programme (STUP), which aims atThe Skill-cum-Technology Upgradation Programme (STUP), which aims at enhancing technology profile of SSI units. enhancing technology profile of SSI units.

Besides providing support to various technical/management institutions, these programmesBesides providing support to various technical/management institutions, these programmes are being conducted in an on-going manner by 18 national level institutions out of corpusare being conducted in an on-going manner by 18 national level institutions out of corpus fund provided by the Bank.fund provided by the Bank.

Cluster Development ProgrammeCluster Development Programme

In the recent years, the Cluster Development Programme of the Bank has undergone aIn the recent years, the Cluster Development Programme of the Bank has undergone a paradigm shift from a technology centric intervention to a comprehensive package ofparadigm shift from a technology centric intervention to a comprehensive package of business development services. The Bank’s relationship with cluster development agenciesbusiness development services. The Bank’s relationship with cluster development agencies continued during the year and the UNIDO programme for technology was extendedcontinued during the year and the UNIDO programme for technology was extended support for the clusters of Ambur (Tamil Nadu) for leather; Ahmedabad for drugs andsupport for the clusters of Ambur (Tamil Nadu) for leather; Ahmedabad for drugs and pharmaceuticals; Banglore for machine tools and Bellary (Karnataka) for garments. Suchpharmaceuticals; Banglore for machine tools and Bellary (Karnataka) for garments. Such interventions have yielded positive results like enhanced productivity, reduction of processinterventions have yielded positive results like enhanced productivity, reduction of process cycle and defect rates, energy conservation, quality upgradation and introduction ofcycle and defect rates, energy conservation, quality upgradation and introduction of environment friendly technologies.environment friendly technologies.

Other ongoing interventions, which continued during the year, included programmes forOther ongoing interventions, which continued during the year, included programmes for the cluster of foundry units at Vijaywada. During the year, the visit of a foundry expertthe cluster of foundry units at Vijaywada. During the year, the visit of a foundry expert from the UK was arranged and the units were provided inputs on improved foundryfrom the UK was arranged and the units were provided inputs on improved foundry practices. In the cluster of rape-seed mustard at Agra, Mathura and Bharatpur, thepractices. In the cluster of rape-seed mustard at Agra, Mathura and Bharatpur, the implementing agency continued with its efforts to bring about improvements in units ofimplementing agency continued with its efforts to bring about improvements in units of different sizes so as to seed new technology and improved operating practices. In anotherdifferent sizes so as to seed new technology and improved operating practices. In another ongoing intervention in the scientific instruments cluster at Ambala, EDII has beenongoing intervention in the scientific instruments cluster at Ambala, EDII has been assigned the responsibility of structuring a growth programme for select units in the cluster.assigned the responsibility of structuring a growth programme for select units in the cluster. In the first phase of the intervention, each sub-component of the student microscope wasIn the first phase of the intervention, each sub-component of the student microscope was standardized and units were provided with jigs and fixtures, tools and dies to enable tem tostandardized and units were provided with jigs and fixtures, tools and dies to enable tem to fabricate as per standard dimensions with acceptable tolerances.fabricate as per standard dimensions with acceptable tolerances.

Environment ManagementEnvironment Management

During 2002-03, the environment management initiative of the Bank was consolidated. TheDuring 2002-03, the environment management initiative of the Bank was consolidated. The intervention with the Punjab State Council for Science and technology (PSCST)intervention with the Punjab State Council for Science and technology (PSCST) endeavored to seed cleaner production technologies in a number of sectors like foundries,endeavored to seed cleaner production technologies in a number of sectors like foundries, rice mills, brick kilns, electroplating units, etc.rice mills, brick kilns, electroplating units, etc.

Marketing InitiativesMarketing Initiatives

During 2002-03, the Bank supported 93 events/activities such as trade fairs, buyer-sellerDuring 2002-03, the Bank supported 93 events/activities such as trade fairs, buyer-seller meets, seminars, trade delegations, etc. with an assistance aggregating to Rs. 148 lakh tomeets, seminars, trade delegations, etc. with an assistance aggregating to Rs. 148 lakh to enhance the marketing capabilities of small scale sector. The initiatives at the national andenhance the marketing capabilities of small scale sector. The initiatives at the national and regional levels covered various industry groups/ activities such as knitwear, textiles, gemsregional levels covered various industry groups/ activities such as knitwear, textiles, gems and jewellery, engineering goods, leather products, stones, handicrafts, rubber, foodand jewellery, engineering goods, leather products, stones, handicrafts, rubber, food processing etc.processing etc.

Support to Industry OrganizationsSupport to Industry Organizations

The Bank has been making efforts for the past few years to initiate developmentalThe Bank has been making efforts for the past few years to initiate developmental programmes through proactive industry associations. In this regard, during the year underprogrammes through proactive industry associations. In this regard, during the year under review, support was extended to the Indian Industries Association, Lucknow to setup areview, support was extended to the Indian Industries Association, Lucknow to setup a model Small Industries Information and Service Center (SIISC) at its central office formodel Small Industries Information and Service Center (SIISC) at its central office for providing information and consultancy support to SSI entrepreneurs throughout the state ofproviding information and consultancy support to SSI entrepreneurs throughout the state of Uttar Pradesh. SIISC will also create a data base on SSIs in UP with special reference toUttar Pradesh. SIISC will also create a data base on SSIs in UP with special reference to their products and raw materials needs and help in widening the market sphere of smalltheir products and raw materials needs and help in widening the market sphere of small scale units through Internet and e-Commerce. In terms of consultancy support, the Centerscale units through Internet and e-Commerce. In terms of consultancy support, the Center will develop capacity in the areas of technology upgradation, credit availability andwill develop capacity in the areas of technology upgradation, credit availability and taxation for the benefit of their members.taxation for the benefit of their members.

SUBSIDIARIES AND ASSOCIATE ORGANIZATION OF SIDBISUBSIDIARIES AND ASSOCIATE ORGANIZATION OF SIDBI

SIDBI Venture Capital Ltd.SIDBI Venture Capital Ltd.

SIDBI Venture Capital Ltd. (SVCL) was established to carry out the business of setting-up,SIDBI Venture Capital Ltd. (SVCL) was established to carry out the business of setting-up, advising and managing venture capital funds and has been acting as the Investmentadvising and managing venture capital funds and has been acting as the Investment Manager to National Venture Fund for Software & Information Technology IndustryManager to National Venture Fund for Software & Information Technology Industry (NFSIT).(NFSIT).

NFSIT is a 10-year close-ended Venture Capital Fund, with a committed corpus of Rs. 100NFSIT is a 10-year close-ended Venture Capital Fund, with a committed corpus of Rs. 100 crore. The fund has been contributed by Small Industries Development Bank of India,crore. The fund has been contributed by Small Industries Development Bank of India, Ministry of Communications & Information Technology (MCIT) (formerly called asMinistry of Communications & Information Technology (MCIT) (formerly called as Ministry of Information Technology / Department of Electronics), Government of IndiaMinistry of Information Technology / Department of Electronics), Government of India and Industrial Development Bank of India. Investment is NFSIT includes Info-tech sector,and Industrial Development Bank of India. Investment is NFSIT includes Info-tech sector, software industry and related businesses such as networking multimedia, datasoftware industry and related businesses such as networking multimedia, data communication services and /or any other related sectors.communication services and /or any other related sectors.

The global downturn in IT spending and other macro economic and political factors aroundThe global downturn in IT spending and other macro economic and political factors around the world affected the software and IT companies, especially the units in the SME sector.the world affected the software and IT companies, especially the units in the SME sector. However, new opportunities in the Business Process Outsourcing (BPO)/ InformationHowever, new opportunities in the Business Process Outsourcing (BPO)/ Information Technology Enabled Services (ITES) sector are emerging and it is expected that this sectorTechnology Enabled Services (ITES) sector are emerging and it is expected that this sector would grow at over 70% in the next 1-2 years. While overseas Venture Capital (VC) fundswould grow at over 70% in the next 1-2 years. While overseas Venture Capital (VC) funds focused on large size investments, the domestic funds were highly selective in theirfocused on large size investments, the domestic funds were highly selective in their investments. Exit has become a major problem for the VC industry in India.investments. Exit has become a major problem for the VC industry in India.

In the present scenario, NFSIT and State/Regional funds promoted by SIDBI have emergedIn the present scenario, NFSIT and State/Regional funds promoted by SIDBI have emerged as major source of VC funds for the SME sector. Considering the present trends, SVCL isas major source of VC funds for the SME sector. Considering the present trends, SVCL is exploring the possibility of setting up a general SME fund, with a focus on knowledge baseexploring the possibility of setting up a general SME fund, with a focus on knowledge base industries.industries.

Technology Bureau for Small EnterprisesTechnology Bureau for Small Enterprises

In collaboration with United Nations-Asian and Pacific Center for Transfer of TechnologyIn collaboration with United Nations-Asian and Pacific Center for Transfer of Technology (APCTT), SIDBI set up Technology Bureau for Small Enterprise (TBSE) in 1995 with the(APCTT), SIDBI set up Technology Bureau for Small Enterprise (TBSE) in 1995 with the objective to strengthen the efforts of small scale units in technology access and transfer.objective to strengthen the efforts of small scale units in technology access and transfer. Services rendered by TBSE include technology promotion through multi-channels,Services rendered by TBSE include technology promotion through multi-channels,

facilitation of transfer of technology, joint ventures, business collaboration and financefacilitation of transfer of technology, joint ventures, business collaboration and finance syndication.syndication.

Credit Guarantee Fund Trust for Small IndustriesCredit Guarantee Fund Trust for Small Industries

The Government of India, in association with SIDBI, formulated a Credit Guarantee FundThe Government of India, in association with SIDBI, formulated a Credit Guarantee Fund Scheme for Small Industries, which was launched on August 30, 2000. The Scheme aims atScheme for Small Industries, which was launched on August 30, 2000. The Scheme aims at helping the new and existing industrial units in the SSI sector, including units inhelping the new and existing industrial units in the SSI sector, including units in information technology and software industry, in getting collateral-free/third-partyinformation technology and software industry, in getting collateral-free/third-party guarantee free credit by way of both term loan and working capital, from eligible lendingguarantee free credit by way of both term loan and working capital, from eligible lending institutions namely scheduled commercial banks, select Regional Rural Banks and such ofinstitutions namely scheduled commercial banks, select Regional Rural Banks and such of the institutions as may be approved by the Government of India.the institutions as may be approved by the Government of India.

The Credit Guarantee Scheme is operated by CGTSI, set up by Government of India andThe Credit Guarantee Scheme is operated by CGTSI, set up by Government of India and SIDBI. The corpus of the Trust is contributed by the Settlers, GOI and SIDBI in the rationSIDBI. The corpus of the Trust is contributed by the Settlers, GOI and SIDBI in the ration of 4:1. The corpus of the Trust has been enhanced to Rs. 427 crore by March 31, 2003.of 4:1. The corpus of the Trust has been enhanced to Rs. 427 crore by March 31, 2003.

CGTSI extends guarantee cover for mitigating credit risk upto 75% of the collateral freeCGTSI extends guarantee cover for mitigating credit risk upto 75% of the collateral free credits extended by eligible lending institutions to the SSI units, subject to maximum creditcredits extended by eligible lending institutions to the SSI units, subject to maximum credit of Rs. 25 lakh per SSI unit. Under the Credit Guarantee Scheme, the eligible lendingof Rs. 25 lakh per SSI unit. Under the Credit Guarantee Scheme, the eligible lending institutions are required to register themselves with CGTSI as Member Lending Institutionsinstitutions are required to register themselves with CGTSI as Member Lending Institutions (MLIs). As on March 31, 2003, there were 35 MLIs of the Trust, comprising 25 Public(MLIs). As on March 31, 2003, there were 35 MLIs of the Trust, comprising 25 Public Sector Banks, 5 Private Sector Banks, 3 Regional Rural Banks, National Small IndustriesSector Banks, 5 Private Sector Banks, 3 Regional Rural Banks, National Small Industries Corporation Ltd. (NSIC) and North Eastern Development Finance Institution.Corporation Ltd. (NSIC) and North Eastern Development Finance Institution.

Further details on SIDBI can be obtained from:Further details on SIDBI can be obtained from: Small Industries Development Bank of IndiaSmall Industries Development Bank of IndiaNariman Bhavan, 227, V. K. Shah Marg,Nariman Bhavan, 227, V. K. Shah Marg,Nariman Point, Mumbai – 400 021.Nariman Point, Mumbai – 400 021.Phone no.:- 2287 2475, 22872508, 2281 7499, 2281 7503.Phone no.:- 2287 2475, 22872508, 2281 7499, 2281 7503.Fax:- 2287 2490, 2287 2450. Fax:- 2287 2490, 2287 2450.

TECHNOLOGY BUREAU FOR SMALLTECHNOLOGY BUREAU FOR SMALL ENTERPRISESENTERPRISES

The problems faced by the small enterprises particularly in accessing technology andThe problems faced by the small enterprises particularly in accessing technology and maintaining competitiveness have been formidable. Lack of familiarity with new options,maintaining competitiveness have been formidable. Lack of familiarity with new options, inability in accessing them, and organizing necessary finance for growth are a few whichinability in accessing them, and organizing necessary finance for growth are a few which need to be addressed through institutional support. Absence of a platform where smallneed to be addressed through institutional support. Absence of a platform where small enterprises can tap opportunities at the global level for acquisition of technology orenterprises can tap opportunities at the global level for acquisition of technology or establish business collaboration has been compounding the problem. Technology Bureauestablish business collaboration has been compounding the problem. Technology Bureau for Small Enterprises (TBSE) is an endeavour to bridge the technology gap. Resultingfor Small Enterprises (TBSE) is an endeavour to bridge the technology gap. Resulting from the collaboration between the United Nations’ Asian and Pacific Centre for Transferfrom the collaboration between the United Nations’ Asian and Pacific Centre for Transfer of Technology (APCTT) and Small Industries Development Bank of India (SIDBI). Itof Technology (APCTT) and Small Industries Development Bank of India (SIDBI). It represents, under one roof, synergy of technology and finance. The important features ofrepresents, under one roof, synergy of technology and finance. The important features of its objectives, role and services are:its objectives, role and services are:

Offers a professionally managed system for technology and collaborations search.Offers a professionally managed system for technology and collaborations search. Helps in building up confidence between prospective partners.Helps in building up confidence between prospective partners. Lends a friendly hand in the intricate task of negotiations and matching of perceptionsLends a friendly hand in the intricate task of negotiations and matching of perceptions

for technical collaborations.for technical collaborations. Provides a gateway to global technology market through Internet and other channels.Provides a gateway to global technology market through Internet and other channels. Unique mechanism for arranging technology and finance.Unique mechanism for arranging technology and finance. Renders customized service and has wide ranging affiliations.Renders customized service and has wide ranging affiliations. Takes up project appraisal and preparation of business plan for finance syndication.Takes up project appraisal and preparation of business plan for finance syndication.

THE CO – PROMOTERS

APCTT, a United Nations regional institution under the aegis of the Economic and SocialAPCTT, a United Nations regional institution under the aegis of the Economic and Social Commission for Asia and the Pacific (ESCAP), Bangkok, assists member and associateCommission for Asia and the Pacific (ESCAP), Bangkok, assists member and associate member countries of ESCAP through strengthening their capabilities to develop, transfer,member countries of ESCAP through strengthening their capabilities to develop, transfer, adapt and apply technology. It improves terms of technology and identifies and promotesadapt and apply technology. It improves terms of technology and identifies and promotes the development and transfer of technologies relevant to the region. APCTT’s activitiesthe development and transfer of technologies relevant to the region. APCTT’s activities are mainly directed towards the small and medium enterprises (SMEs). The Centerare mainly directed towards the small and medium enterprises (SMEs). The Center maintains close and effective linkages with key sources and users of technologymaintains close and effective linkages with key sources and users of technology management, development, transfer and utilization.management, development, transfer and utilization.

SIDBI was established in April 1990 under an Act of the Indian Parliament to serve as theSIDBI was established in April 1990 under an Act of the Indian Parliament to serve as the principal financial institution for promotion, financing and development of industry in theprincipal financial institution for promotion, financing and development of industry in the small scale sector and to co-ordinate with similar institutions engaged in promotingsmall scale sector and to co-ordinate with similar institutions engaged in promoting financing or developing small scale sector. SIDBI offers a wide range of assistancefinancing or developing small scale sector. SIDBI offers a wide range of assistance through its direct finance, refinance, bills finance, equity finance, venture capital, foreignthrough its direct finance, refinance, bills finance, equity finance, venture capital, foreign currency loans, lines of credit and other schemes of assistance besides support services. Itcurrency loans, lines of credit and other schemes of assistance besides support services. It has set up the Technology Development and Modernization Fund to encourage technologyhas set up the Technology Development and Modernization Fund to encourage technology up-gradation in small enterprises.up-gradation in small enterprises.

Range of ServicesRange of Services

Technology Information:Technology Information: The Bureau has a large computerized database on technologyThe Bureau has a large computerized database on technology options available from different countries. It gives the user updated information on sourcesoptions available from different countries. It gives the user updated information on sources of technologies and means of accessing them. Also background information onof technologies and means of accessing them. Also background information on technology-seeking enterprises is maintained and made available to interested technologytechnology-seeking enterprises is maintained and made available to interested technology suppliers.suppliers.

Match Making:Match Making: TBSE identifies business partners willing to collaborate, brings themTBSE identifies business partners willing to collaborate, brings them face to face and extends support to tie up financial assistance and other requirements forface to face and extends support to tie up financial assistance and other requirements for transfer of technology and joint ventures. Collaborating partners are further assisted intransfer of technology and joint ventures. Collaborating partners are further assisted in drafting agreements.drafting agreements.

Finance Syndication:Finance Syndication: Depending on the cost of project, nature and quantum of assistanceDepending on the cost of project, nature and quantum of assistance required, the Bureau undertakes finance syndication through SIDBI covering term loans,required, the Bureau undertakes finance syndication through SIDBI covering term loans, foreign currency, venture capital, letter of credit; equity assistance; and on selective basisforeign currency, venture capital, letter of credit; equity assistance; and on selective basis interest-free loan to meet initial expenditure in the pre-technology absorption stage.interest-free loan to meet initial expenditure in the pre-technology absorption stage.

Support Services:Support Services: It arranges consultancy services, visits of overseas experts for in-plantIt arranges consultancy services, visits of overseas experts for in-plant counseling; coordinates buyer-seller meets for specific product / process technologies; andcounseling; coordinates buyer-seller meets for specific product / process technologies; and represents the business interests of small enterprises in international events.represents the business interests of small enterprises in international events.

Further details on TBSE can be obtained from:Further details on TBSE can be obtained from:Technology Bureau for Small Enterprises,Technology Bureau for Small Enterprises,APCTT Building, Qutab Institutional Area,APCTT Building, Qutab Institutional Area,P.O.Box – 4575, Off New Mehrauli Road,P.O.Box – 4575, Off New Mehrauli Road,New Delhi – 110 016.New Delhi – 110 016.Ph.:- +91-11-6864501, 6856276, 6966521.Ph.:- +91-11-6864501, 6856276, 6966521.Fax:- +91-11-6856274.Fax:- +91-11-6856274.E-mail:- tbsc@apctt.org.E-mail:- tbsc@apctt.org.URL:- www.techsmall.com.URL:- www.techsmall.com.

MAHARASTRA INDUSTRIAL DEVELOPMENTMAHARASTRA INDUSTRIAL DEVELOPMENT CORPORATIONCORPORATION

Maharashtra Industrial Development Corporation popularly known as MIDC wasMaharashtra Industrial Development Corporation popularly known as MIDC was established on 1established on 1stst August 1962. Constitutors under the Maharashtra Industrial August 1962. Constitutors under the Maharashtra Industrial Development Act, 1961. MIDC’s basic objective is to set up industrial development. ItsDevelopment Act, 1961. MIDC’s basic objective is to set up industrial development. Its activities are:activities are:

Development of Industrial area by acquiring land.Development of Industrial area by acquiring land. Preparing layout with suitable grouping of plots of various sizes and allotment of plotsPreparing layout with suitable grouping of plots of various sizes and allotment of plots

on leasehold basis.on leasehold basis. Construction of roads, drainage system and provision streetlight in the industrial areas.Construction of roads, drainage system and provision streetlight in the industrial areas. Planning implementing and managing water supply schemes.Planning implementing and managing water supply schemes. Establishing common facility center (CFC) by providing accommodations for bank,Establishing common facility center (CFC) by providing accommodations for bank,

post office, telecom facilities, police stations, medical facilities canteens etc.post office, telecom facilities, police stations, medical facilities canteens etc. Establishment of effluent collection and disposing systems for chemical zones.Establishment of effluent collection and disposing systems for chemical zones. Implementing Government / Semi government projects.Implementing Government / Semi government projects.

MIDC was developed more than 222 industrial estates across the state, spread over an areaMIDC was developed more than 222 industrial estates across the state, spread over an area of 52,223 hectares of land. The cumulative fixed investment made by the cooperation isof 52,223 hectares of land. The cumulative fixed investment made by the cooperation is around Rs. 2,552 crores providing quality infrastructure, both social and industrial has beenaround Rs. 2,552 crores providing quality infrastructure, both social and industrial has been the hall mark of the MIDC’s mission. There are one or more industrial estates developed bythe hall mark of the MIDC’s mission. There are one or more industrial estates developed by MIDC in each revenue district of Maharashtra. The category of plots is Industrial,MIDC in each revenue district of Maharashtra. The category of plots is Industrial, Commercial, Amenities, Residential and Under Sheds. Its main office is located atCommercial, Amenities, Residential and Under Sheds. Its main office is located at Mahakali Caves Road, Andheri (East), Mumbai 400093.Mahakali Caves Road, Andheri (East), Mumbai 400093.

Allotment Procedure of Plots:Allotment Procedure of Plots:

Various MIDC officers have been empowered to allot the plot depending upon the size andVarious MIDC officers have been empowered to allot the plot depending upon the size and location.location.

The entrepreneur has to apply for a plot of land in the prescribed application from andThe entrepreneur has to apply for a plot of land in the prescribed application from and enclose a cover letter, a project profile, block plan of proposed construction and requiredenclose a cover letter, a project profile, block plan of proposed construction and required processing fee (which ranges from Rs. 300 /- to Rs. 5050 /- ). The allotment committeeprocessing fee (which ranges from Rs. 300 /- to Rs. 5050 /- ). The allotment committee scrutinizes the proposal and then offer letter is issued normally within 15 days. As a nextscrutinizes the proposal and then offer letter is issued normally within 15 days. As a next step, the promoter has to submit an application for allotment in the prescribed form alongstep, the promoter has to submit an application for allotment in the prescribed form along with the Earnest Money Deposit (50% of the total premium amount). Within 30 days thewith the Earnest Money Deposit (50% of the total premium amount). Within 30 days the allotee has to pay the balance amount and execute the “Agreement to lease”. The plot canallotee has to pay the balance amount and execute the “Agreement to lease”. The plot can be mortgaged for getting the financial assistance from banks or financial institution subjectbe mortgaged for getting the financial assistance from banks or financial institution subject to the consent from MIDC and a tripartite agreement is entered into . the plot is to beto the consent from MIDC and a tripartite agreement is entered into . the plot is to be utilized as consent as per the clauses of the agreement is entered into . The buildingutilized as consent as per the clauses of the agreement is entered into . The building completion certificate (B.C.C.) is to be obtained from the planning authority and finally thecompletion certificate (B.C.C.) is to be obtained from the planning authority and finally the allottee is allowed to use the built premises. The final lease is to be executed for a period ofallottee is allowed to use the built premises. The final lease is to be executed for a period of 95 years after completing the above -mentioned formalities. The ground rent is a nominal95 years after completing the above -mentioned formalities. The ground rent is a nominal amount of Rs. 1 per plot for a calendar year. The plot is not allowed to be transferred oramount of Rs. 1 per plot for a calendar year. The plot is not allowed to be transferred or disposed without prior written consent from MIDC. The transfer rule are framed anddisposed without prior written consent from MIDC. The transfer rule are framed and amended from time to time. amended from time to time.

Advantages of Locating the Industry in MIDC Area:Advantages of Locating the Industry in MIDC Area:

No separate non –agriculture permission is required.No separate non –agriculture permission is required. Clear title of land is assured.Clear title of land is assured. The land is owned by the State Government and allotted on 95 years leasehold tenure.The land is owned by the State Government and allotted on 95 years leasehold tenure. Filtered water supply to plot is assured by MIDC through its own water supplyFiltered water supply to plot is assured by MIDC through its own water supply

schemes.schemes. Power supply is available from MSEB.Power supply is available from MSEB. MIDC constructs ready built sheds/galas for small entrepreneurs and for electronicMIDC constructs ready built sheds/galas for small entrepreneurs and for electronic

industries.industries. Separate zones are earmarked to accommodate Engineering/chemical/ElectronicSeparate zones are earmarked to accommodate Engineering/chemical/Electronic

industries.industries.

Plots are carved out to accommodate small, medium, and large-scale industrial units.Plots are carved out to accommodate small, medium, and large-scale industrial units. As well as commercial complex and various amenities in a well planned lay out andAs well as commercial complex and various amenities in a well planned lay out and

Congenial atmosphere.Congenial atmosphere.

Disadvantages of locating the Industry in MIDC Area:Disadvantages of locating the Industry in MIDC Area:

MIDC plot are leasehold and transfer rules keep on changing.MIDC plot are leasehold and transfer rules keep on changing. Generally the entrepreneur is not entitled to the benefits of appreciation of land price.Generally the entrepreneur is not entitled to the benefits of appreciation of land price.

Further details on MIDC can be obtained from:Further details on MIDC can be obtained from:Maharashtra Industrial Development Corporation,Maharashtra Industrial Development Corporation,“Udyog Sarathi”, Mahakali Caves Road,“Udyog Sarathi”, Mahakali Caves Road,Andheri (E), Mumbai – 400 093.Andheri (E), Mumbai – 400 093.Phone no.:- 91-22-2687 0052/54/27,Phone no.:- 91-22-2687 0052/54/27,Fax:- 91-22-2687 1587.Fax:- 91-22-2687 1587.Website: http:/www.midcindia.orgWebsite: http:/www.midcindia.org

Maharashtra Small Scale Industries DevelopmentMaharashtra Small Scale Industries Development Corporation Ltd. (MSSIDC)Corporation Ltd. (MSSIDC)

Maharashtra Small Scale Development Corporation was established in 1962 and later on it got registered as a public limited company. Corporation has head-office at Mumbai and seven divisional offices and twenty-three Branch offices at various districts. One production center (Paithani Production) at Paithan, District Aurangabad and one liaison office at Delhi. To help small-scale entrepreneurs, development of SSI and provide stability to SSI.

1. Supply under Raw Material Credit / Supply Scheme:a. Bank guarantees & Creditsb. Warehousing servicesc. Performa Invoiced. Supply rate ordere. Post-dated cheques

2. Marketing Assistance : Corporation helps to sell products of SSI units to State Govt./Central Govt. undertakings. Some units have been registered with the Corporation as suppliers to the government undertakings. Corporation assists the SSI units in filling, tenders published by State/Central Government. Once the purchase order is received, to give concerned SSI order to supply material and to help get payment of that order in time. After given supply order to SSI, Corporation gives 75% advance payment to concerned SSI if he gave bank surety. Under another scheme, concerned customer gives certificate of received goods, then concerned SSI get 80% payment from Corporation, so SSI get working capital and can supply goods and keep production continued. On behalf of State Govt. Corporation, supply to govt. buyer, under 19 Price Agreement Annual Supply Scheme.

3. Import-Export Assistance: SSI can import raw material from particular producer through corporation. Imported goods / material can keep in corporations godown or custom bonded as he wishes. After the payment goods can distributed accordingly to SSI. It is necessary to customize goods in certain period under this scheme.

4.Warehousing on commercial basis: Storage and handling raw material handling, equipments to assist SSI’s for public undertaking and other producer’s.

5. Handicraft / Handloom / Exhibitions: Provide shops to Handicraft/handloom industries/skill workers/artists via exhibitions, media and marketing.

6. Paithani Sari: Production and marketing for paithani saris (Pride of Maharashtra).

Further details on MSSIDC can be obtained from:Further details on MSSIDC can be obtained from:Maharashtra Small-Scale Industries Development,Maharashtra Small-Scale Industries Development,Kripanidhi, Walchand Hirachand Marg, Kripanidhi, Walchand Hirachand Marg, Ballard Estate, Mumbai – 400 038.Ballard Estate, Mumbai – 400 038.

MAHARASHTRA STATE FINANCIALMAHARASHTRA STATE FINANCIAL CORPORATIONCORPORATION

The Maharashtra State Financial Corporation (MSFC) has been set up under the `StateThe Maharashtra State Financial Corporation (MSFC) has been set up under the `State Financial Corporations (SFCs) Act 1951’. The Corporation has been operating in the StateFinancial Corporations (SFCs) Act 1951’. The Corporation has been operating in the State of Maharashtra since 1962 and in the State of Goa and the Union Territory of Daman &of Maharashtra since 1962 and in the State of Goa and the Union Territory of Daman & Diu since 1964.Diu since 1964. The main function of MSFC is to provide Term Loan assistance to smallThe main function of MSFC is to provide Term Loan assistance to small and medium scale industries (new as well as existing) for acquisition of fixed assets likeand medium scale industries (new as well as existing) for acquisition of fixed assets like land, building, plant and machinery.land, building, plant and machinery.

Eligible Industries / Activities

a) Most of the industrial activities such as Manufacturing, Assembling, Servicing, a) Most of the industrial activities such as Manufacturing, Assembling, Servicing, Processing, Preservation, Transportation, Setting-up Industrial Estates, Road Processing, Preservation, Transportation, Setting-up Industrial Estates, Road Construction etc.Construction etc.

b) Small Nursing Homes, Hotels, Restaurants, Tourism Related Activities.b) Small Nursing Homes, Hotels, Restaurants, Tourism Related Activities.c) Medical Practitioners, Qualified Professionals.c) Medical Practitioners, Qualified Professionals.

Major Schemes - Major Schemes - General Loan General Loan Equipment Finance Equipment Finance Small Nursing Homes Small Nursing Homes Electro-Medical Equipment for Medical Practitioners Electro-Medical Equipment for Medical Practitioners Ex-servicemen Ex-servicemen Women Women Entrepreneurs Entrepreneurs Service Industries Service Industries Hotels, Restaurants & Tourism Related Activities Hotels, Restaurants & Tourism Related Activities Qualified Professionals Qualified Professionals Mahila Udyam Nidhi Mahila Udyam Nidhi National Equity Fund National Equity Fund Equipment Lease Finance Equipment Lease Finance Technology Development & Modernisation Technology Development & Modernisation Extended Extended Credit Facilities for good clients.Credit Facilities for good clients.

Loan Limits Limited Companies Limited Companies : Upto Rs. 2.40 crore: Upto Rs. 2.40 crore Proprietary / Partnership Firms Proprietary / Partnership Firms : Upto Rs. 90 lakh : Upto Rs. 90 lakh

Project Cost Limit Project Cost Limit : : Upto Rs. 10 crore. Upto Rs. 10 crore. (Cost of the fixed assets, margin money for working capital, preliminary & pre-operative(Cost of the fixed assets, margin money for working capital, preliminary & pre-operative expenses and contingencies).expenses and contingencies).

Net Worth Limit : Upto Rs. 10 crore.

(Paid – up capital + free reserves excluding share premium amount)

Interest Rates:Interest Rates: Ranging between 12.5% and 20.5% p.a., depending upon scheme, quantum of loan, rate ofRanging between 12.5% and 20.5% p.a., depending upon scheme, quantum of loan, rate of refinance, eligibility for refinance, covered under line of credit etc.refinance, eligibility for refinance, covered under line of credit etc.

Quantum of Assistance

The loan amount is worked out considering the debt-equity ratio & minimum promoters’ contribution norms also ensuring that at least 10 per cent security margin is maintained on the value of fixed assets eligible for loan. Higher security margin and/or collateral security may also be insisted depending upon nature of assets & risk perception.

Debt – Equity Ratio (D/E )

For loan amount upto Rs. 10 lakh, D/E at 3:1 (75% loan, 25% equity) is observed, while for loan amount over Rs. 10 lakh, D/E depends upon the scheme, loan amount, nature of assets and risk perception and is usually 2:1, but may even extend to 1:1, keeping in mind viability and collateral security. `Equity’ includes promoters’ contribution, share capital, seed capital, State Govt. subsidy, part of the reserves, portion of accruals transferred out of profits, interest free unsecured loans (quasi equity) etc. `Debt’ includes long term loans, deferred payments etc.

Processing Fee (For Long Term Loans)

Loan above Rs. 50,000 & Loan above Rs. 50,000 & upto Rs. 10 lakh upto Rs. 10 lakh : 0.7% of the amount sanctioned.: 0.7% of the amount sanctioned.

Loan above Rs. 10 lakh Loan above Rs. 10 lakh : 1% of the amount sanctioned: 1% of the amount sanctioned subject to the maximum of Rs. 1 lakh. subject to the maximum of Rs. 1 lakh.

Repayment PeriodRepayment PeriodMaximum 8 years, Moratorium up to 2 years from the date of first disbursement duringMaximum 8 years, Moratorium up to 2 years from the date of first disbursement during which only interest payment commences. For certain schemes shorter repayment period iswhich only interest payment commences. For certain schemes shorter repayment period is prescribed.prescribed.

Further details on MSFC can be obtained from:

New Excelsior Bldg., A.K. Nayak Marg, Fort, Mumbai - 400 001 (Te;. 2077711-12, 2077786-87; Fax 2070113) Regional Offices are located at Amravati, Aurangabad, Kolhapur, Mumbai Konkan, Nagpur, Nashik, Pune, Thane and Panaji (Goa).

MAHARASHTRA INDUSTRIAL & TECHNICAL CONSULTANCY SERVICES LTD. (MITCON)

(A Joint Venture of ICICI, IDBI, IFCI, SICOM, MIDC, MSSIDC & Banks)

MITCON was promoted by ICICI, IDBI, IFCI, SICOM, MIDC, MSSIDC & Banks as aMITCON was promoted by ICICI, IDBI, IFCI, SICOM, MIDC, MSSIDC & Banks as a catalyst for industrial growth especially in the SMEs sector. Over a period of last 18years;catalyst for industrial growth especially in the SMEs sector. Over a period of last 18years; MITCON has grown to all India level with a strong team of 40 consultants. MITCON isMITCON has grown to all India level with a strong team of 40 consultants. MITCON is well networked with experts in various fields and updated of latest developments across thewell networked with experts in various fields and updated of latest developments across the globe. MITCON’s reach is your advantage.globe. MITCON’s reach is your advantage.

MITCON has a well-equipped infrastructure including state-of-the-art facilities, library,MITCON has a well-equipped infrastructure including state-of-the-art facilities, library, computerized national as well as international memberships, tie-ups and accreditations:computerized national as well as international memberships, tie-ups and accreditations: Policy and Macro study services for policy-makers (Government of Maharashtra)Policy and Macro study services for policy-makers (Government of Maharashtra) Region & Industry StudiesRegion & Industry Studies Long range Planning ReportsLong range Planning Reports Industrial Area PlanningIndustrial Area Planning Pre-investment ServicesPre-investment Services Techno Economic Feasibility Reports(TEFR) Detailed Project Reports(DPR)Detailed Project Reports(DPR) Market ResearchMarket Research Financial tie-upsFinancial tie-ups Project Management ServicesProject Management Services Energy AuditsEnergy Audits Safety AuditsSafety Audits Environment AuditsEnvironment Audits Operation AuditsOperation Audits Rehabilitation Rehabilitation ModernizationModernization Quality Management ServicesQuality Management Services Marketing Research & AssistanceMarketing Research & Assistance Transfer of TechnologyTransfer of Technology Joint Ventures, Collaborations & Tie-upsJoint Ventures, Collaborations & Tie-ups Energy & Projects Services (EPS)Energy & Projects Services (EPS) Energy Information Business (EIB)Energy Information Business (EIB)

MITCON provide IT Solutions for Energy audits Efficiency & Conservation. We ensure MITCON provide IT Solutions for Energy audits Efficiency & Conservation. We ensure visible impact on Customer Business, Culture and Profitability.visible impact on Customer Business, Culture and Profitability.

The training programmes are conducted by MITCON under the following:

Prime Minister’s Rozgar Yojana (PMRY) – Dept. of Industries, Govt. of Maharashtra. Swarnajayanti Gram Swarozgar Yojana (SGSY) – Rural Development Dept., Govt. of

Maharashtra. Swarna Jayanti Shahari Rozgar Yojana (SJSRY) – Dept. of Urban Development, Govt.

of Maharashtra.

Entrepreneurship Development Programmes (EDP) for Dept. of Science & technology (DST) Industrial Development Bank of India. Small Industries Development Bank of India National Bank for Agriculture and Rural Development, Govt. of Maharashtra.

Skill Development through Science & Technology (STST) – Dept. of Science & Technology

Science & Technology Entrepreneurship Development Schemes (STEDS) - Dept. of Science & Technology.

District Rural Industries Project (DRIP) – NABARD Providing consultancy for procuring ISO-9001 Certification Publishing viable project profiles, reports for the entrepreneurs from various

disciplines.

FurtherFurther details on MITCON can be obtained from:details on MITCON can be obtained from:“Kubera Chambers” Shivajinagar, Pune 411 005. Maharashtra Tel : 020- 5533309, 5534322 Fax : 020- 5530305, 5533206.E - mail : mitcon @ giaspn01. vsnl . net .inE - mail : mitcon @ giaspn01. vsnl . net .in